Correlation Between Solar Alliance and American Water
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and American 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 Solar Alliance and American Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and American Water Works, you can compare the effects of market volatilities on Solar Alliance and American 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 Solar Alliance with a short position of American Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and American Water.
Diversification Opportunities for Solar Alliance and American Water
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solar and American is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and American Water Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Water Works and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with American Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Water Works has no effect on the direction of Solar Alliance i.e., Solar Alliance and American Water go up and down completely randomly.
Pair Corralation between Solar Alliance and American Water
Assuming the 90 days horizon Solar Alliance Energy is expected to under-perform the American Water. In addition to that, Solar Alliance is 4.83 times more volatile than American Water Works. It trades about -0.03 of its total potential returns per unit of risk. American Water Works is currently generating about 0.01 per unit of volatility. If you would invest 13,746 in American Water Works on November 27, 2024 and sell it today you would earn a total of 28.00 from holding American Water Works or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. American Water Works
Performance |
| Timeline |
| Solar Alliance Energy |
| American Water Works |
Solar Alliance and American Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and American Water
The main advantage of trading using opposite Solar Alliance and American Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, American 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 American Water will offset losses from the drop in American Water's long position.| Solar Alliance vs. Aurora Solar Technologies | Solar Alliance vs. Cryptoblox Technologies | Solar Alliance vs. Sun Pacific Holding | Solar Alliance vs. Solar Integrated Roofing |
| American Water vs. California Water Service | American Water vs. Middlesex Water | American Water vs. American States Water | American 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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