Correlation Between California Water and Consolidated Water
Can any of the company-specific risk be diversified away by investing in both California Water and Consolidated 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 California Water and Consolidated Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Water Service and Consolidated Water Co, you can compare the effects of market volatilities on California Water and Consolidated 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 California Water with a short position of Consolidated Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Water and Consolidated Water.
Diversification Opportunities for California Water and Consolidated Water
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Consolidated is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding California Water Service and Consolidated Water Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Water and California Water 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 California Water Service are associated (or correlated) with Consolidated Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Water has no effect on the direction of California Water i.e., California Water and Consolidated Water go up and down completely randomly.
Pair Corralation between California Water and Consolidated Water
Considering the 90-day investment horizon California Water Service is expected to generate 1.38 times more return on investment than Consolidated Water. However, California Water is 1.38 times more volatile than Consolidated Water Co. It trades about 0.04 of its potential returns per unit of risk. Consolidated Water Co is currently generating about 0.05 per unit of risk. If you would invest 4,477 in California Water Service on November 3, 2024 and sell it today you would earn a total of 52.00 from holding California Water Service or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Water Service vs. Consolidated Water Co
Performance |
| Timeline |
| California Water Service |
| Consolidated Water |
California Water and Consolidated Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Water and Consolidated Water
The main advantage of trading using opposite California Water and Consolidated Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Water position performs unexpectedly, Consolidated 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 Consolidated Water will offset losses from the drop in Consolidated Water's long position.| California Water vs. SJW Group Common | California Water vs. Artesian Resources | California Water vs. The York Water | California Water vs. American States Water |
| Consolidated Water vs. SJW Group Common | Consolidated Water vs. Middlesex Water | Consolidated Water vs. California Water Service | Consolidated 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |