Correlation Between Cadiz and SJW Group

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

By analyzing existing cross correlation between Cadiz Inc and SJW Group Common, you can compare the effects of market volatilities on Cadiz and SJW Group 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 SJW Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz and SJW Group.

Diversification Opportunities for Cadiz and SJW Group

-0.56

Correlation Coefficient

Cadiz  SJW Group

Excellent diversification

The 3 months correlation between Cadiz and SJW is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Inc and SJW Group Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJW Group Common 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 SJW Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJW Group Common has no effect on the direction of Cadiz i.e., Cadiz and SJW Group go up and down completely randomly.

Pair Corralation between Cadiz and SJW Group

Given the investment horizon of 90 days Cadiz Inc is expected to under-perform the SJW Group. In addition to that, Cadiz is 2.32 times more volatile than SJW Group Common. It trades about -0.14 of its total potential returns per unit of risk. SJW Group Common is currently generating about 0.06 per unit of volatility. If you would invest  4,897  in SJW Group Common on December 27, 2024 and sell it today you would earn a total of  297.00  from holding SJW Group Common or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cadiz Inc  vs.  SJW Group Common

Cadiz Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadiz Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SJW Group Common

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SJW Group Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking indicators, SJW Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cadiz and SJW Group

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

The idea behind Cadiz Inc and SJW Group Common 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.