Correlation Between Dominion Energy and Artesian Resources

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

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

Diversification Opportunities for Dominion Energy and Artesian Resources

-0.56

Correlation Coefficient

Dominion Energy  Artesian Resources

Excellent diversification

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

Pair Corralation between Dominion Energy and Artesian Resources

Taking into account the 90-day investment horizon Dominion Energy is expected to generate 1.44 times more return on investment than Artesian Resources. However, Dominion Energy is 1.44 times more volatile than Artesian Resources. It trades about 0.11 of its potential returns per unit of risk. Artesian Resources is currently generating about -0.26 per unit of risk. If you would invest  5,853  in Dominion Energy on July 18, 2024 and sell it today you would earn a total of  202.00  from holding Dominion Energy or generate 3.45% return on investment over 90 days.

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

Dominion Energy  vs.  Artesian Resources

Dominion Energy

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dominion Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Dominion Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Artesian Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artesian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dominion Energy and Artesian Resources

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

The idea behind Dominion Energy and Artesian Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.