Correlation Between Gelsenwasser and American States
Can any of the company-specific risk be diversified away by investing in both Gelsenwasser and American States 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 Gelsenwasser and American States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gelsenwasser AG and American States Water, you can compare the effects of market volatilities on Gelsenwasser and American States 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 Gelsenwasser with a short position of American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelsenwasser and American States.
Diversification Opportunities for Gelsenwasser and American States
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gelsenwasser and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and American States go up and down completely randomly.
Pair Corralation between Gelsenwasser and American States
Assuming the 90 days horizon Gelsenwasser AG is expected to under-perform the American States. In addition to that, Gelsenwasser is 2.08 times more volatile than American States Water. It trades about -0.05 of its total potential returns per unit of risk. American States Water is currently generating about 0.02 per unit of volatility. If you would invest 7,633 in American States Water on August 26, 2024 and sell it today you would earn a total of 327.00 from holding American States Water or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gelsenwasser AG vs. American States Water
Performance |
| Timeline |
| Gelsenwasser AG |
| American States Water |
Gelsenwasser and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gelsenwasser and American States
The main advantage of trading using opposite Gelsenwasser and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gelsenwasser position performs unexpectedly, American States 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 States will offset losses from the drop in American States' long position.| Gelsenwasser vs. Spirent Communications plc | Gelsenwasser vs. SLR Investment Corp | Gelsenwasser vs. Singapore Telecommunications Limited | Gelsenwasser vs. INTERSHOP Communications Aktiengesellschaft |
| American States vs. MEDICAL FACILITIES NEW | American States vs. Public Storage | American States vs. SBM OFFSHORE | American States vs. DATAGROUP SE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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