Correlation Between SJW Group and Cadiz

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

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

Diversification Opportunities for SJW Group and Cadiz

-0.56

Correlation Coefficient

SJW Group  Cadiz

Excellent diversification

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

Pair Corralation between SJW Group and Cadiz

Considering the 90-day investment horizon SJW Group Common is expected to generate 0.43 times more return on investment than Cadiz. However, SJW Group Common is 2.32 times less risky than Cadiz. It trades about 0.06 of its potential returns per unit of risk. Cadiz Inc is currently generating about -0.14 per unit of risk. 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

SJW Group Common  vs.  Cadiz Inc

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.

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.

Pair Trading with SJW Group and Cadiz

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

The idea behind SJW Group Common and Cadiz Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.