Correlation Between Rubicon Water and New Zealand

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

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

Diversification Opportunities for Rubicon Water and New Zealand

0.0

Correlation Coefficient

Rubicon Water  New Zealand

Pay attention - limited upside

The 3 months correlation between Rubicon and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Water and New Zealand Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Oil and Rubicon 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 Rubicon Water are associated (or correlated) with New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Oil has no effect on the direction of Rubicon Water i.e., Rubicon Water and New Zealand go up and down completely randomly.

Pair Corralation between Rubicon Water and New Zealand

If you would invest (100.00) in New Zealand Oil on December 28, 2024 and sell it today you would earn a total of  100.00  from holding New Zealand Oil or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rubicon Water  vs.  New Zealand Oil

Rubicon Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubicon Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Rubicon Water is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Zealand Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Zealand Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, New Zealand is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rubicon Water and New Zealand

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

The idea behind Rubicon Water and New Zealand Oil 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.