Correlation Between California Water and Prudential Utility
Can any of the company-specific risk be diversified away by investing in both California Water and Prudential Utility 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 Prudential Utility 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 Prudential Utility Fund, you can compare the effects of market volatilities on California Water and Prudential Utility 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 Prudential Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Water and Prudential Utility.
Diversification Opportunities for California Water and Prudential Utility
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Prudential is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding California Water Service and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Utility 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 Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of California Water i.e., California Water and Prudential Utility go up and down completely randomly.
Pair Corralation between California Water and Prudential Utility
Considering the 90-day investment horizon California Water Service is expected to under-perform the Prudential Utility. In addition to that, California Water is 1.33 times more volatile than Prudential Utility Fund. It trades about -0.01 of its total potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.03 per unit of volatility. If you would invest 1,347 in Prudential Utility Fund on November 27, 2024 and sell it today you would earn a total of 219.00 from holding Prudential Utility Fund or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Water Service vs. Prudential Utility Fund
Performance |
| Timeline |
| California Water Service |
| Prudential Utility |
California Water and Prudential Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Water and Prudential Utility
The main advantage of trading using opposite California Water and Prudential Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Water position performs unexpectedly, Prudential Utility 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 Prudential Utility will offset losses from the drop in Prudential Utility'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 |
| Prudential Utility vs. Live Oak Health | Prudential Utility vs. Blackrock Health Sciences | Prudential Utility vs. The Gabelli Healthcare | Prudential Utility vs. Blackrock Health Sciences |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |