Correlation Between Waste Management and SSP Group
Can any of the company-specific risk be diversified away by investing in both Waste Management and SSP Group 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 SSP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and SSP Group PLC, you can compare the effects of market volatilities on Waste Management and SSP Group 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 SSP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and SSP Group.
Diversification Opportunities for Waste Management and SSP Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Waste and SSP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and SSP Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSP Group PLC 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 SSP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSP Group PLC has no effect on the direction of Waste Management i.e., Waste Management and SSP Group go up and down completely randomly.
Pair Corralation between Waste Management and SSP Group
Assuming the 90 days trading horizon Waste Management is expected to under-perform the SSP Group. But the stock apears to be less risky and, when comparing its historical volatility, Waste Management is 2.31 times less risky than SSP Group. The stock trades about -0.19 of its potential returns per unit of risk. The SSP Group PLC is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 15,300 in SSP Group PLC on September 13, 2024 and sell it today you would earn a total of 3,570 from holding SSP Group PLC or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. SSP Group PLC
Performance |
| Timeline |
| Waste Management |
| SSP Group PLC |
Waste Management and SSP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and SSP Group
The main advantage of trading using opposite Waste Management and SSP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, SSP Group 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 SSP Group will offset losses from the drop in SSP Group's long position.| Waste Management vs. Atalaya Mining | Waste Management vs. Hochschild Mining plc | Waste Management vs. Lundin Mining Corp | Waste Management vs. Deltex Medical Group |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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