Correlation Between SJW Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SJW Group and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on SJW Group and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SJW Group and Dow Jones.
Diversification Opportunities for SJW Group and Dow Jones
Very good diversification
The 3 months correlation between SJW and Dow is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SJW Group Common and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of SJW Group i.e., SJW Group and Dow Jones go up and down completely randomly.
Pair Corralation between SJW Group and Dow Jones
Considering the 90-day investment horizon SJW Group Common is expected to under-perform the Dow Jones. In addition to that, SJW Group is 1.45 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of volatility. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SJW Group Common vs. Dow Jones Industrial
Performance |
| Timeline |
SJW Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SJW Group Common
Pair trading matchups for SJW Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SJW Group and Dow Jones
The main advantage of trading using opposite SJW Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SJW Group position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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