Correlation Between York Water and Essential Utilities

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

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

Diversification Opportunities for York Water and Essential Utilities

0.13

Correlation Coefficient

York Water  Essential Utilities

Average diversification

The 3 months correlation between York and Essential is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The York Water and Essential Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Utilities and York 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 The York Water are associated (or correlated) with Essential Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Utilities has no effect on the direction of York Water i.e., York Water and Essential Utilities go up and down completely randomly.

Pair Corralation between York Water and Essential Utilities

Given the investment horizon of 90 days The York Water is expected to under-perform the Essential Utilities. In addition to that, York Water is 1.13 times more volatile than Essential Utilities. It trades about -0.08 of its total potential returns per unit of risk. Essential Utilities is currently generating about 0.06 per unit of volatility. If you would invest  3,867  in Essential Utilities on August 30, 2024 and sell it today you would earn a total of  161.00  from holding Essential Utilities or generate 4.16% return on investment over 90 days.

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

The York Water  vs.  Essential Utilities

York Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The York Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Essential Utilities

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Essential Utilities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Essential Utilities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with York Water and Essential Utilities

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

The idea behind The York Water and Essential Utilities 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.