Correlation Between REVLTNRY CNCPT and Aqua America

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

By analyzing existing cross correlation between REVLTNRY CNCPT and Aqua America, you can compare the effects of market volatilities on REVLTNRY CNCPT and Aqua America 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 REVLTNRY CNCPT with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVLTNRY CNCPT and Aqua America.

Diversification Opportunities for REVLTNRY CNCPT and Aqua America

-0.51

Correlation Coefficient

REVLTNRY CNCPT  Aqua America

Excellent diversification

The 3 months correlation between REVLTNRY and Aqua is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding REVLTNRY CNCPT and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and REVLTNRY CNCPT 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 REVLTNRY CNCPT are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of REVLTNRY CNCPT i.e., REVLTNRY CNCPT and Aqua America go up and down completely randomly.

Pair Corralation between REVLTNRY CNCPT and Aqua America

Assuming the 90 days trading horizon REVLTNRY CNCPT is expected to generate 133.87 times more return on investment than Aqua America. However, REVLTNRY CNCPT is 133.87 times more volatile than Aqua America. It trades about 0.19 of its potential returns per unit of risk. Aqua America is currently generating about 0.05 per unit of risk. If you would invest  0.50  in REVLTNRY CNCPT on September 23, 2024 and sell it today you would earn a total of  0.05  from holding REVLTNRY CNCPT or generate 10.0% return on investment over 90 days.

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

REVLTNRY CNCPT  vs.  Aqua America

REVLTNRY CNCPT

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REVLTNRY CNCPT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, REVLTNRY CNCPT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aqua America

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua America are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aqua America is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with REVLTNRY CNCPT and Aqua America

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

The idea behind REVLTNRY CNCPT and Aqua America 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..