Correlation Between York Water and Global Water
Can any of the company-specific risk be diversified away by investing in both York Water and Global 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 York Water and Global Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The York Water and Global Water Resources, you can compare the effects of market volatilities on York Water and Global 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 York Water with a short position of Global Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of York Water and Global Water.
Diversification Opportunities for York Water and Global Water
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between York and Global is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The York Water and Global Water Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Water Resources and York Water 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 The York Water are associated (or correlated) with Global Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Water Resources has no effect on the direction of York Water i.e., York Water and Global Water go up and down completely randomly.
Pair Corralation between York Water and Global Water
Given the investment horizon of 90 days The York Water is expected to under-perform the Global Water. But the stock apears to be less risky and, when comparing its historical volatility, The York Water is 1.04 times less risky than Global Water. The stock trades about -0.13 of its potential returns per unit of risk. The Global Water Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,151 in Global Water Resources on November 3, 2024 and sell it today you would lose (1.00) from holding Global Water Resources or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The York Water vs. Global Water Resources
Performance |
| Timeline |
| York Water |
| Global Water Resources |
York Water and Global Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with York Water and Global Water
The main advantage of trading using opposite York Water and Global Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if York Water position performs unexpectedly, Global 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 Global Water will offset losses from the drop in Global Water's long position.| York Water vs. California Water Service | York Water vs. SJW Group Common | York Water vs. Artesian Resources | York Water vs. American States Water |
| Global Water vs. Middlesex Water | Global Water vs. California Water Service | Global Water vs. American States Water | Global Water vs. Artesian Resources |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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