Correlation Between AGRICULTBK HADR25 and Aqua America
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 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 AGRICULTBK HADR25 and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and Aqua America, you can compare the effects of market volatilities on AGRICULTBK HADR25 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 AGRICULTBK HADR25 with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and Aqua America.
Diversification Opportunities for AGRICULTBK HADR25 and Aqua America
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGRICULTBK and Aqua is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC 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 AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and Aqua America go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR25 and Aqua America
Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 2.26 times more return on investment than Aqua America. However, AGRICULTBK HADR25 is 2.26 times more volatile than Aqua America. It trades about -0.02 of its potential returns per unit of risk. Aqua America is currently generating about -0.24 per unit of risk. If you would invest 1,278 in AGRICULTBK HADR25 YC on October 25, 2024 and sell it today you would lose (18.00) from holding AGRICULTBK HADR25 YC or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. Aqua America
Performance |
| Timeline |
| AGRICULTBK HADR25 |
| Aqua America |
AGRICULTBK HADR25 and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR25 and Aqua America
The main advantage of trading using opposite AGRICULTBK HADR25 and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 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.| AGRICULTBK HADR25 vs. Brockhaus Capital Management | AGRICULTBK HADR25 vs. Sixt Leasing SE | AGRICULTBK HADR25 vs. UNITED RENTALS | AGRICULTBK HADR25 vs. Sims Metal Management |
| Aqua America vs. Strategic Education | Aqua America vs. EEDUCATION ALBERT AB | Aqua America vs. DeVry Education Group | Aqua America vs. STRAYER EDUCATION |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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