Correlation Between GFL ENVIRONM and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Keysight Technologies 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 Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Keysight Technologies, you can compare the effects of market volatilities on GFL ENVIRONM and Keysight Technologies 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 Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Keysight Technologies.
Diversification Opportunities for GFL ENVIRONM and Keysight Technologies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and Keysight is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Keysight Technologies go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Keysight Technologies
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.21 times less return on investment than Keysight Technologies. But when comparing it to its historical volatility, GFL ENVIRONM is 1.15 times less risky than Keysight Technologies. It trades about 0.17 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,202 in Keysight Technologies on September 4, 2024 and sell it today you would earn a total of 3,174 from holding Keysight Technologies or generate 24.04% 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. Keysight Technologies
Performance |
| Timeline |
| GFL ENVIRONM |
| Keysight Technologies |
GFL ENVIRONM and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Keysight Technologies
The main advantage of trading using opposite GFL ENVIRONM and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Republic Services | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Veolia Environnement SA |
| Keysight Technologies vs. RCM TECHNOLOGIES | Keysight Technologies vs. NIPPON STEEL SPADR | Keysight Technologies vs. GFL ENVIRONM | Keysight Technologies vs. RELIANCE STEEL AL |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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