Correlation Between Cadiz Depositary and American Water
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and American 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 Depositary and American Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and American Water Works, you can compare the effects of market volatilities on Cadiz Depositary and American 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 Depositary with a short position of American Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and American Water.
Diversification Opportunities for Cadiz Depositary and American Water
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cadiz and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and American Water Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Water Works and Cadiz Depositary 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 Depositary Shares are associated (or correlated) with American Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Water Works has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and American Water go up and down completely randomly.
Pair Corralation between Cadiz Depositary and American Water
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 2.29 times more return on investment than American Water. However, Cadiz Depositary is 2.29 times more volatile than American Water Works. It trades about 0.06 of its potential returns per unit of risk. American Water Works is currently generating about 0.0 per unit of risk. If you would invest 821.00 in Cadiz Depositary Shares on August 23, 2024 and sell it today you would earn a total of 799.00 from holding Cadiz Depositary Shares or generate 97.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. American Water Works
Performance |
| Timeline |
| Cadiz Depositary Shares |
| American Water Works |
Cadiz Depositary and American Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and American Water
The main advantage of trading using opposite Cadiz Depositary and American Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, American 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 American Water will offset losses from the drop in American Water's long position.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
| American Water vs. California Water Service | American Water vs. Middlesex Water | American Water vs. American States Water | American Water vs. The York 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |