Correlation Between Cadiz and Middlesex Water
Can any of the company-specific risk be diversified away by investing in both Cadiz and Middlesex Water 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 Cadiz and Middlesex Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Inc and Middlesex Water, you can compare the effects of market volatilities on Cadiz and Middlesex Water 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 Cadiz with a short position of Middlesex Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz and Middlesex Water.
Diversification Opportunities for Cadiz and Middlesex Water
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cadiz and Middlesex is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Inc and Middlesex Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlesex Water and Cadiz 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 Cadiz Inc are associated (or correlated) with Middlesex Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlesex Water has no effect on the direction of Cadiz i.e., Cadiz and Middlesex Water go up and down completely randomly.
Pair Corralation between Cadiz and Middlesex Water
Given the investment horizon of 90 days Cadiz Inc is expected to generate 2.51 times more return on investment than Middlesex Water. However, Cadiz is 2.51 times more volatile than Middlesex Water. It trades about 0.0 of its potential returns per unit of risk. Middlesex Water is currently generating about -0.02 per unit of risk. If you would invest 507.00 in Cadiz Inc on November 3, 2024 and sell it today you would lose (13.00) from holding Cadiz Inc or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Inc vs. Middlesex Water
Performance |
| Timeline |
| Cadiz Inc |
| Middlesex Water |
Cadiz and Middlesex Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz and Middlesex Water
The main advantage of trading using opposite Cadiz and Middlesex Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz position performs unexpectedly, Middlesex Water 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 Middlesex Water will offset losses from the drop in Middlesex Water's long position.| Cadiz vs. Middlesex Water | Cadiz vs. SJW Group Common | Cadiz vs. California Water Service | Cadiz vs. The York Water |
| Middlesex Water vs. SJW Group Common | Middlesex Water vs. American States Water | Middlesex Water vs. The York Water | Middlesex Water vs. Artesian Resources |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |