Correlation Between American Water and Cadiz Depositary
Can any of the company-specific risk be diversified away by investing in both American Water and Cadiz Depositary 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 American Water and Cadiz Depositary into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Water Works and Cadiz Depositary Shares, you can compare the effects of market volatilities on American Water and Cadiz Depositary 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 American Water with a short position of Cadiz Depositary. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Water and Cadiz Depositary.
Diversification Opportunities for American Water and Cadiz Depositary
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Cadiz is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Water Works and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares and American Water 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 American Water Works are associated (or correlated) with Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of American Water i.e., American Water and Cadiz Depositary go up and down completely randomly.
Pair Corralation between American Water and Cadiz Depositary
Considering the 90-day investment horizon American Water is expected to generate 3.41 times less return on investment than Cadiz Depositary. In addition to that, American Water is 2.67 times more volatile than Cadiz Depositary Shares. It trades about 0.01 of its total potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.06 per unit of volatility. If you would invest 1,840 in Cadiz Depositary Shares on November 18, 2024 and sell it today you would earn a total of 16.00 from holding Cadiz Depositary Shares or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Water Works vs. Cadiz Depositary Shares
Performance |
| Timeline |
| American Water Works |
| Cadiz Depositary Shares |
American Water and Cadiz Depositary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Water and Cadiz Depositary
The main advantage of trading using opposite American Water and Cadiz Depositary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Water position performs unexpectedly, Cadiz Depositary 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 Cadiz Depositary will offset losses from the drop in Cadiz Depositary's long position.| American Water vs. California Water Service | American Water vs. Middlesex Water | American Water vs. American States Water | American Water vs. The York Water |
| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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