Correlation Between Artesian Resources and SJW Group
Can any of the company-specific risk be diversified away by investing in both Artesian Resources and SJW Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Artesian Resources and SJW Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artesian Resources and SJW Group Common, you can compare the effects of market volatilities on Artesian Resources and SJW Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Artesian Resources with a short position of SJW Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artesian Resources and SJW Group.
Diversification Opportunities for Artesian Resources and SJW Group
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Artesian and SJW is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Artesian Resources and SJW Group Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJW Group Common and Artesian Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Artesian Resources are associated (or correlated) with SJW Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJW Group Common has no effect on the direction of Artesian Resources i.e., Artesian Resources and SJW Group go up and down completely randomly.
Pair Corralation between Artesian Resources and SJW Group
Assuming the 90 days horizon Artesian Resources is expected to under-perform the SJW Group. But the stock apears to be less risky and, when comparing its historical volatility, Artesian Resources is 1.33 times less risky than SJW Group. The stock trades about -0.02 of its potential returns per unit of risk. The SJW Group Common is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,870 in SJW Group Common on November 3, 2024 and sell it today you would earn a total of 153.00 from holding SJW Group Common or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Artesian Resources vs. SJW Group Common
Performance |
| Timeline |
| Artesian Resources |
| SJW Group Common |
Artesian Resources and SJW Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Artesian Resources and SJW Group
The main advantage of trading using opposite Artesian Resources and SJW Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artesian Resources position performs unexpectedly, SJW Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SJW Group will offset losses from the drop in SJW Group's long position.| Artesian Resources vs. California Water Service | Artesian Resources vs. SJW Group Common | Artesian Resources vs. The York Water | Artesian Resources vs. American States Water |
| SJW Group vs. California Water Service | SJW Group vs. Artesian Resources | SJW Group vs. The York Water | SJW Group vs. American States Water |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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