Correlation Between Strategic Investments and Aqua America
Can any of the company-specific risk be diversified away by investing in both Strategic Investments and Aqua America 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 Strategic Investments and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and Aqua America, you can compare the effects of market volatilities on Strategic Investments and Aqua America 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 Strategic Investments with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Aqua America.
Diversification Opportunities for Strategic Investments and Aqua America
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Strategic and Aqua is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Strategic Investments i.e., Strategic Investments and Aqua America go up and down completely randomly.
Pair Corralation between Strategic Investments and Aqua America
Assuming the 90 days horizon Strategic Investments AS is expected to under-perform the Aqua America. In addition to that, Strategic Investments is 2.99 times more volatile than Aqua America. It trades about 0.0 of its total potential returns per unit of risk. Aqua America is currently generating about 0.05 per unit of volatility. If you would invest 3,206 in Aqua America on September 14, 2024 and sell it today you would earn a total of 504.00 from holding Aqua America or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. Aqua America
Performance |
| Timeline |
| Strategic Investments |
| Aqua America |
Strategic Investments and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and Aqua America
The main advantage of trading using opposite Strategic Investments and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| Strategic Investments vs. Ameriprise Financial | Strategic Investments vs. Ares Management Corp | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. SIVERS SEMICONDUCTORS AB |
| Aqua America vs. MAVEN WIRELESS SWEDEN | Aqua America vs. Cleanaway Waste Management | Aqua America vs. Sims Metal Management | Aqua America vs. Ares Management Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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