Correlation Between Atlantica Sustainable and York Water

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

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

Diversification Opportunities for Atlantica Sustainable and York Water

-0.67

Correlation Coefficient

Atlantica Sustainable  York Water

Excellent diversification

The 3 months correlation between Atlantica and York is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and The York Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on York Water and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with York Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of York Water has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and York Water go up and down completely randomly.

Pair Corralation between Atlantica Sustainable and York Water

Allowing for the 90-day total investment horizon Atlantica Sustainable Infrastructure is expected to generate 0.09 times more return on investment than York Water. However, Atlantica Sustainable Infrastructure is 11.23 times less risky than York Water. It trades about 0.2 of its potential returns per unit of risk. The York Water is currently generating about -0.07 per unit of risk. If you would invest  2,184  in Atlantica Sustainable Infrastructure on August 31, 2024 and sell it today you would earn a total of  32.00  from holding Atlantica Sustainable Infrastructure or generate 1.47% return on investment over 90 days.

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

Atlantica Sustainable Infrastr  vs.  The York Water

Atlantica Sustainable

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantica Sustainable Infrastructure are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 fairly stable basic indicators, York Water is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Atlantica Sustainable and York Water

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

The idea behind Atlantica Sustainable Infrastructure and The York Water 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.