Correlation Between Cadiz and York Water
Can any of the company-specific risk be diversified away by investing in both Cadiz and York 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 York 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 The York Water, you can compare the effects of market volatilities on Cadiz and York 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 York Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz and York Water.
Diversification Opportunities for Cadiz and York Water
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cadiz and York is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Inc and The York Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on York 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 York Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of York Water has no effect on the direction of Cadiz i.e., Cadiz and York Water go up and down completely randomly.
Pair Corralation between Cadiz and York Water
Given the investment horizon of 90 days Cadiz Inc is expected to under-perform the York Water. In addition to that, Cadiz is 3.04 times more volatile than The York Water. It trades about -0.07 of its total potential returns per unit of risk. The York Water is currently generating about -0.16 per unit of volatility. If you would invest 3,272 in The York Water on November 1, 2024 and sell it today you would lose (183.00) from holding The York Water or give up 5.59% 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. The York Water
Performance |
| Timeline |
| Cadiz Inc |
| York Water |
Cadiz and York Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz and York Water
The main advantage of trading using opposite Cadiz and York Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz position performs unexpectedly, York 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 York Water will offset losses from the drop in York Water's long position.| Cadiz vs. Middlesex Water | Cadiz vs. SJW Group Common | Cadiz vs. California Water Service | Cadiz vs. The York Water |
| York Water vs. California Water Service | York Water vs. SJW Group Common | York Water vs. Artesian Resources | York Water 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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