Correlation Between Waste Management and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both Waste Management and Schweiter Technologies 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 Waste Management and Schweiter Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Schweiter Technologies AG, you can compare the effects of market volatilities on Waste Management and Schweiter Technologies 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 Waste Management with a short position of Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Schweiter Technologies.
Diversification Opportunities for Waste Management and Schweiter Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waste and Schweiter is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Waste Management 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 Waste Management are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Waste Management i.e., Waste Management and Schweiter Technologies go up and down completely randomly.
Pair Corralation between Waste Management and Schweiter Technologies
Assuming the 90 days trading horizon Waste Management is expected to generate 0.57 times more return on investment than Schweiter Technologies. However, Waste Management is 1.75 times less risky than Schweiter Technologies. It trades about 0.09 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.02 per unit of risk. If you would invest 19,916 in Waste Management on September 1, 2024 and sell it today you would earn a total of 3,044 from holding Waste Management or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Schweiter Technologies AG
Performance |
| Timeline |
| Waste Management |
| Schweiter Technologies |
Waste Management and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Schweiter Technologies
The main advantage of trading using opposite Waste Management and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.| Waste Management vs. Spirent Communications plc | Waste Management vs. Cairo Communication SpA | Waste Management vs. Roebuck Food Group | Waste Management vs. Edita Food Industries |
| Schweiter Technologies vs. Spirent Communications plc | Schweiter Technologies vs. mobilezone holding AG | Schweiter Technologies vs. MTI Wireless Edge | Schweiter Technologies vs. GoldMining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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