Correlation Between Waste Management and GoldMining
Can any of the company-specific risk be diversified away by investing in both Waste Management and GoldMining 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 GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and GoldMining, you can compare the effects of market volatilities on Waste Management and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and GoldMining.
Diversification Opportunities for Waste Management and GoldMining
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Waste and GoldMining is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Waste Management i.e., Waste Management and GoldMining go up and down completely randomly.
Pair Corralation between Waste Management and GoldMining
Assuming the 90 days trading horizon Waste Management is expected to generate 0.5 times more return on investment than GoldMining. However, Waste Management is 1.99 times less risky than GoldMining. It trades about 0.14 of its potential returns per unit of risk. GoldMining is currently generating about -0.17 per unit of risk. If you would invest 21,150 in Waste Management on August 24, 2024 and sell it today you would earn a total of 1,000.00 from holding Waste Management or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.87% |
| Values | Daily Returns |
Waste Management vs. GoldMining
Performance |
| Timeline |
| Waste Management |
| GoldMining |
Waste Management and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and GoldMining
The main advantage of trading using opposite Waste Management and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Waste Management vs. Summit Materials Cl | Waste Management vs. Ryanair Holdings plc | Waste Management vs. Sealed Air Corp | Waste Management vs. Alaska Air Group |
| GoldMining vs. Quadrise Plc | GoldMining vs. Intuitive Investments Group | GoldMining vs. European Metals Holdings | GoldMining vs. Athelney Trust plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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