Correlation Between American States and SJW Group
Can any of the company-specific risk be diversified away by investing in both American States 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 American States and SJW Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American States Water and SJW Group Common, you can compare the effects of market volatilities on American States 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 American States with a short position of SJW Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American States and SJW Group.
Diversification Opportunities for American States and SJW Group
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and SJW is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American States Water 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 American States 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 States Water 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 American States i.e., American States and SJW Group go up and down completely randomly.
Pair Corralation between American States and SJW Group
Considering the 90-day investment horizon American States Water is expected to under-perform the SJW Group. In addition to that, American States is 1.11 times more volatile than SJW Group Common. It trades about -0.18 of its total potential returns per unit of risk. SJW Group Common is currently generating about -0.09 per unit of volatility. If you would invest 4,907 in SJW Group Common on October 24, 2024 and sell it today you would lose (104.00) from holding SJW Group Common or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American States Water vs. SJW Group Common
Performance |
| Timeline |
| American States Water |
| SJW Group Common |
American States and SJW Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American States and SJW Group
The main advantage of trading using opposite American States and SJW Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American States 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.| American States vs. Middlesex Water | American States vs. SJW Group Common | American States vs. The York Water | American States vs. Artesian Resources |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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