Correlation Between American Water and Far East
Can any of the company-specific risk be diversified away by investing in both American Water and Far East 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 Far East 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 Far East Wind, you can compare the effects of market volatilities on American Water and Far East 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 Far East. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Water and Far East.
Diversification Opportunities for American Water and Far East
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Far is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Water Works and Far East Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far East Wind 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 Far East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far East Wind has no effect on the direction of American Water i.e., American Water and Far East go up and down completely randomly.
Pair Corralation between American Water and Far East
If you would invest 0.01 in Far East Wind on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Far East Wind or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Water Works vs. Far East Wind
Performance |
| Timeline |
| American Water Works |
| Far East Wind |
American Water and Far East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Water and Far East
The main advantage of trading using opposite American Water and Far East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Water position performs unexpectedly, Far East 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 Far East will offset losses from the drop in Far East'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 |
| Far East vs. Old Republic International | Far East vs. PennantPark Investment | Far East vs. Burlington Stores | Far East vs. Comstock Holding Companies |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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