Correlation Between Pure Cycle and SJW Group

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

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

Diversification Opportunities for Pure Cycle and SJW Group

-0.35

Correlation Coefficient

Pure Cycle  SJW Group

Very good diversification

The 3 months correlation between Pure and SJW is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pure Cycle 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 Pure Cycle 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 Pure Cycle 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 Pure Cycle i.e., Pure Cycle and SJW Group go up and down completely randomly.

Pair Corralation between Pure Cycle and SJW Group

Given the investment horizon of 90 days Pure Cycle is expected to under-perform the SJW Group. But the stock apears to be less risky and, when comparing its historical volatility, Pure Cycle is 1.15 times less risky than SJW Group. The stock trades about -0.21 of its potential returns per unit of risk. The SJW Group Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,955  in SJW Group Common on December 26, 2024 and sell it today you would earn a total of  163.00  from holding SJW Group Common or generate 3.29% return on investment over 90 days.

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

Pure Cycle  vs.  SJW Group Common

Pure Cycle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Cycle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward-looking indicators, SJW Group is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pure Cycle and SJW Group

The main advantage of trading using opposite Pure Cycle and SJW Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Cycle 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 Pure Cycle 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.