Correlation Between SEB SA and Waste Management
Can any of the company-specific risk be diversified away by investing in both SEB SA and Waste Management 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 SEB SA and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and Waste Management, you can compare the effects of market volatilities on SEB SA and Waste Management 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 SEB SA with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and Waste Management.
Diversification Opportunities for SEB SA and Waste Management
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEB and Waste is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and SEB SA 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 SEB SA are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of SEB SA i.e., SEB SA and Waste Management go up and down completely randomly.
Pair Corralation between SEB SA and Waste Management
Assuming the 90 days trading horizon SEB SA is expected to under-perform the Waste Management. In addition to that, SEB SA is 1.34 times more volatile than Waste Management. It trades about -0.15 of its total potential returns per unit of risk. Waste Management is currently generating about 0.28 per unit of volatility. If you would invest 20,848 in Waste Management on August 29, 2024 and sell it today you would earn a total of 2,084 from holding Waste Management or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEB SA vs. Waste Management
Performance |
| Timeline |
| SEB SA |
| Waste Management |
SEB SA and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and Waste Management
The main advantage of trading using opposite SEB SA and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| SEB SA vs. Waste Management | SEB SA vs. Tatton Asset Management | SEB SA vs. Jupiter Fund Management | SEB SA vs. Endeavour Mining Corp |
| Waste Management vs. Lendinvest PLC | Waste Management vs. Neometals | Waste Management vs. Coor Service Management | Waste Management vs. Albion Technology General |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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