Correlation Between Essential Utilities and SJW Group
Can any of the company-specific risk be diversified away by investing in both Essential Utilities and SJW Group 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 Essential Utilities and SJW Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Utilities and SJW Group Common, you can compare the effects of market volatilities on Essential Utilities and SJW Group 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 Essential Utilities with a short position of SJW Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Utilities and SJW Group.
Diversification Opportunities for Essential Utilities and SJW Group
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Essential and SJW is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Essential Utilities and SJW Group Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJW Group Common and Essential Utilities 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 Essential Utilities are associated (or correlated) with SJW Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJW Group Common has no effect on the direction of Essential Utilities i.e., Essential Utilities and SJW Group go up and down completely randomly.
Pair Corralation between Essential Utilities and SJW Group
Given the investment horizon of 90 days Essential Utilities is expected to generate 0.83 times more return on investment than SJW Group. However, Essential Utilities is 1.21 times less risky than SJW Group. It trades about 0.06 of its potential returns per unit of risk. SJW Group Common is currently generating about 0.02 per unit of risk. If you would invest 3,711 in Essential Utilities on August 29, 2024 and sell it today you would earn a total of 317.00 from holding Essential Utilities or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Essential Utilities vs. SJW Group Common
Performance |
| Timeline |
| Essential Utilities |
| SJW Group Common |
Essential Utilities and SJW Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Utilities and SJW Group
The main advantage of trading using opposite Essential Utilities and SJW Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Utilities position performs unexpectedly, SJW Group 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 SJW Group will offset losses from the drop in SJW Group's long position.| Essential Utilities vs. American States Water | Essential Utilities vs. California Water Service | Essential Utilities vs. Consolidated Water Co | Essential Utilities vs. SJW Group Common |
| SJW Group vs. California Water Service | SJW Group vs. Artesian Resources | SJW Group vs. The York Water | SJW Group vs. American States 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |