Correlation Between Waste Management and State Bank
Can any of the company-specific risk be diversified away by investing in both Waste Management and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and State Bank of, you can compare the effects of market volatilities on Waste Management and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and State Bank.
Diversification Opportunities for Waste Management and State Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Waste and State is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Waste Management i.e., Waste Management and State Bank go up and down completely randomly.
Pair Corralation between Waste Management and State Bank
Assuming the 90 days trading horizon Waste Management is expected to generate 0.45 times more return on investment than State Bank. However, Waste Management is 2.24 times less risky than State Bank. It trades about 0.23 of its potential returns per unit of risk. State Bank of is currently generating about -0.3 per unit of risk. If you would invest 20,522 in Waste Management on October 25, 2024 and sell it today you would earn a total of 666.00 from holding Waste Management or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Waste Management vs. State Bank of
Performance |
| Timeline |
| Waste Management |
| State Bank |
Waste Management and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and State Bank
The main advantage of trading using opposite Waste Management and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Waste Management vs. Toyota Motor Corp | Waste Management vs. SoftBank Group Corp | Waste Management vs. OTP Bank Nyrt | Waste Management vs. ONEOK Inc |
| State Bank vs. Waste Management | State Bank vs. Planet Fitness Cl | State Bank vs. Ross Stores | State Bank vs. CVS Health Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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