Correlation Between Connecticut Light and Aris Water
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and Aris 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 Connecticut Light and Aris Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and Aris Water Solutions, you can compare the effects of market volatilities on Connecticut Light and Aris 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 Connecticut Light with a short position of Aris Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Aris Water.
Diversification Opportunities for Connecticut Light and Aris Water
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Connecticut and Aris is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Aris Water Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Water Solutions and Connecticut Light 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 The Connecticut Light are associated (or correlated) with Aris Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Water Solutions has no effect on the direction of Connecticut Light i.e., Connecticut Light and Aris Water go up and down completely randomly.
Pair Corralation between Connecticut Light and Aris Water
Assuming the 90 days horizon Connecticut Light is expected to generate 2.22 times less return on investment than Aris Water. But when comparing it to its historical volatility, The Connecticut Light is 2.11 times less risky than Aris Water. It trades about 0.32 of its potential returns per unit of risk. Aris Water Solutions is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,436 in Aris Water Solutions on October 29, 2024 and sell it today you would earn a total of 536.00 from holding Aris Water Solutions or generate 22.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
The Connecticut Light vs. Aris Water Solutions
Performance |
| Timeline |
| Connecticut Light |
| Aris Water Solutions |
Connecticut Light and Aris Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and Aris Water
The main advantage of trading using opposite Connecticut Light and Aris Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, Aris 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 Aris Water will offset losses from the drop in Aris Water's long position.| Connecticut Light vs. BK Technologies | Connecticut Light vs. BOS Better Online | Connecticut Light vs. Dolphin Entertainment | Connecticut Light vs. Interpublic Group of |
| Aris Water vs. Middlesex Water | Aris Water vs. California Water Service | Aris Water vs. Global Water Resources | Aris 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |