Correlation Between GFL ENVIRONM and Vistra Corp
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Vistra Corp 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 GFL ENVIRONM and Vistra Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Vistra Corp, you can compare the effects of market volatilities on GFL ENVIRONM and Vistra Corp 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 GFL ENVIRONM with a short position of Vistra Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Vistra Corp.
Diversification Opportunities for GFL ENVIRONM and Vistra Corp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and Vistra is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Vistra Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Corp and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with Vistra Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Corp has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Vistra Corp go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Vistra Corp
Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Vistra Corp. But the stock apears to be less risky and, when comparing its historical volatility, GFL ENVIRONM is 4.04 times less risky than Vistra Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Vistra Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,094 in Vistra Corp on October 7, 2024 and sell it today you would earn a total of 616.00 from holding Vistra Corp or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Vistra Corp
Performance |
| Timeline |
| GFL ENVIRONM |
| Vistra Corp |
GFL ENVIRONM and Vistra Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Vistra Corp
The main advantage of trading using opposite GFL ENVIRONM and Vistra Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Vistra Corp 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 Vistra Corp will offset losses from the drop in Vistra Corp's long position.| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. NMI Holdings |
| Vistra Corp vs. Telecom Argentina SA | Vistra Corp vs. Shenandoah Telecommunications | Vistra Corp vs. CITIC Telecom International | Vistra Corp vs. ADRIATIC METALS LS 013355 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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