Correlation Between SJW Group and Consolidated Water
Can any of the company-specific risk be diversified away by investing in both SJW Group 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 SJW Group and Consolidated Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SJW Group Common and Consolidated Water Co, you can compare the effects of market volatilities on SJW Group 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 SJW Group with a short position of Consolidated Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of SJW Group and Consolidated Water.
Diversification Opportunities for SJW Group and Consolidated Water
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SJW and Consolidated is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SJW Group Common and Consolidated Water Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Water and SJW Group 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 SJW Group Common 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 SJW Group i.e., SJW Group and Consolidated Water go up and down completely randomly.
Pair Corralation between SJW Group and Consolidated Water
Considering the 90-day investment horizon SJW Group Common is expected to under-perform the Consolidated Water. But the stock apears to be less risky and, when comparing its historical volatility, SJW Group Common is 1.65 times less risky than Consolidated Water. The stock trades about -0.05 of its potential returns per unit of risk. The Consolidated Water Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,465 in Consolidated Water Co on August 27, 2024 and sell it today you would earn a total of 220.00 from holding Consolidated Water Co or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SJW Group Common vs. Consolidated Water Co
Performance |
| Timeline |
| SJW Group Common |
| Consolidated Water |
SJW Group and Consolidated Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SJW Group and Consolidated Water
The main advantage of trading using opposite SJW Group and Consolidated Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SJW Group 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.| SJW Group vs. California Water Service | SJW Group vs. Artesian Resources | SJW Group vs. The York Water | SJW Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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