Correlation Between Excelerate Energy and Consolidated Water

Can any of the company-specific risk be diversified away by investing in both Excelerate Energy and Consolidated 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 Excelerate Energy and Consolidated Water into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excelerate Energy and Consolidated Water Co, you can compare the effects of market volatilities on Excelerate Energy and Consolidated 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 Excelerate Energy with a short position of Consolidated Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and Consolidated Water.

Diversification Opportunities for Excelerate Energy and Consolidated Water

0.03

Correlation Coefficient

Excelerate Energy  Consolidated Water

Significant diversification

The 3 months correlation between Excelerate and Consolidated is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Consolidated Water Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Water and Excelerate Energy 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 Excelerate Energy are associated (or correlated) with Consolidated Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Water has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and Consolidated Water go up and down completely randomly.

Pair Corralation between Excelerate Energy and Consolidated Water

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 0.89 times more return on investment than Consolidated Water. However, Excelerate Energy is 1.13 times less risky than Consolidated Water. It trades about 0.08 of its potential returns per unit of risk. Consolidated Water Co is currently generating about -0.05 per unit of risk. If you would invest  1,553  in Excelerate Energy on March 1, 2024 and sell it today you would earn a total of  154.00  from holding Excelerate Energy or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Excelerate Energy  vs.  Consolidated Water Co

Excelerate Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Excelerate Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Consolidated Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Water Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Excelerate Energy and Consolidated Water

The main advantage of trading using opposite Excelerate Energy and Consolidated Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelerate Energy position performs unexpectedly, Consolidated 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 Consolidated Water will offset losses from the drop in Consolidated Water's long position.

The idea behind Excelerate Energy and Consolidated Water Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.