Correlation Between Cadiz and Global Water
Can any of the company-specific risk be diversified away by investing in both Cadiz 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 Cadiz and Global Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Inc and Global Water Resources, you can compare the effects of market volatilities on Cadiz 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 Cadiz with a short position of Global Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz and Global Water.
Diversification Opportunities for Cadiz and Global Water
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadiz and Global is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Inc 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 Cadiz 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 Cadiz Inc 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 Cadiz i.e., Cadiz and Global Water go up and down completely randomly.
Pair Corralation between Cadiz and Global Water
Given the investment horizon of 90 days Cadiz Inc is expected to under-perform the Global Water. In addition to that, Cadiz is 2.77 times more volatile than Global Water Resources. It trades about -0.13 of its total potential returns per unit of risk. Global Water Resources is currently generating about -0.14 per unit of volatility. If you would invest 1,267 in Global Water Resources on January 25, 2024 and sell it today you would lose (54.00) from holding Global Water Resources or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Inc vs. Global Water Resources
Performance |
| Timeline |
| Cadiz Inc |
| Global Water Resources |
Cadiz and Global Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz and Global Water
The main advantage of trading using opposite Cadiz and Global Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz 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.| Cadiz vs. Middlesex Water | Cadiz vs. SJW Corporation | Cadiz vs. California Water Service | Cadiz vs. The York 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |