Correlation Between SJW Group and United Utilities
Can any of the company-specific risk be diversified away by investing in both SJW Group and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on SJW Group and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SJW Group and United Utilities.
Diversification Opportunities for SJW Group and United Utilities
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SJW and United is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SJW Group Common and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of SJW Group i.e., SJW Group and United Utilities go up and down completely randomly.
Pair Corralation between SJW Group and United Utilities
Considering the 90-day investment horizon SJW Group Common is expected to under-perform the United Utilities. In addition to that, SJW Group is 1.0 times more volatile than United Utilities Group. It trades about -0.04 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of volatility. If you would invest 2,316 in United Utilities Group on August 31, 2024 and sell it today you would earn a total of 551.00 from holding United Utilities Group or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SJW Group Common vs. United Utilities Group
Performance |
| Timeline |
| SJW Group Common |
| United Utilities |
SJW Group and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SJW Group and United Utilities
The main advantage of trading using opposite SJW Group and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SJW Group position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' 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 |
| United Utilities vs. American Water Works | United Utilities vs. Middlesex Water | United Utilities vs. SJW Group Common | United Utilities vs. California Water Service |
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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