Correlation Between Waste Management and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Waste Management and Caledonia Mining 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 Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Caledonia Mining, you can compare the effects of market volatilities on Waste Management and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Caledonia Mining.
Diversification Opportunities for Waste Management and Caledonia Mining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Waste and Caledonia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Waste Management i.e., Waste Management and Caledonia Mining go up and down completely randomly.
Pair Corralation between Waste Management and Caledonia Mining
Assuming the 90 days trading horizon Waste Management is expected to generate 0.48 times more return on investment than Caledonia Mining. However, Waste Management is 2.08 times less risky than Caledonia Mining. It trades about 0.07 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.02 per unit of risk. If you would invest 14,800 in Waste Management on October 12, 2024 and sell it today you would earn a total of 6,051 from holding Waste Management or generate 40.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Waste Management vs. Caledonia Mining
Performance |
| Timeline |
| Waste Management |
| Caledonia Mining |
Waste Management and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Caledonia Mining
The main advantage of trading using opposite Waste Management and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Waste Management vs. Verizon Communications | Waste Management vs. Zegona Communications Plc | Waste Management vs. Coor Service Management | Waste Management vs. Litigation Capital Management |
| Caledonia Mining vs. Telecom Italia SpA | Caledonia Mining vs. Waste Management | Caledonia Mining vs. Ecclesiastical Insurance Office | Caledonia Mining vs. Spirent Communications 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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