Correlation Between American Water and SIVERS SEMICONDUCTORS

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

By analyzing existing cross correlation between American Water Works and SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on American Water and SIVERS SEMICONDUCTORS 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 American Water with a short position of SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Water and SIVERS SEMICONDUCTORS.

Diversification Opportunities for American Water and SIVERS SEMICONDUCTORS

0.1

Correlation Coefficient

American Water  SIVERS SEMICONDUCTORS

Average diversification

The 3 months correlation between American and SIVERS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Water Works and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS and American 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 American Water Works are associated (or correlated) with SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of American Water i.e., American Water and SIVERS SEMICONDUCTORS go up and down completely randomly.

Pair Corralation between American Water and SIVERS SEMICONDUCTORS

Assuming the 90 days horizon American Water Works is expected to under-perform the SIVERS SEMICONDUCTORS. But the stock apears to be less risky and, when comparing its historical volatility, American Water Works is 7.43 times less risky than SIVERS SEMICONDUCTORS. The stock trades about -0.31 of its potential returns per unit of risk. The SIVERS SEMICONDUCTORS AB is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  14.00  in SIVERS SEMICONDUCTORS AB on September 21, 2024 and sell it today you would earn a total of  12.00  from holding SIVERS SEMICONDUCTORS AB or generate 85.71% return on investment over 90 days.

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

American Water Works  vs.  SIVERS SEMICONDUCTORS AB

American Water Works

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Water Works has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American Water and SIVERS SEMICONDUCTORS

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

The idea behind American Water Works and SIVERS SEMICONDUCTORS AB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.