Correlation Between GFL ENVIRONM and Visa

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Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Visa 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 Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Visa Inc, you can compare the effects of market volatilities on GFL ENVIRONM and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Visa.

Diversification Opportunities for GFL ENVIRONM and Visa

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between GFL and Visa is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Visa go up and down completely randomly.

Pair Corralation between GFL ENVIRONM and Visa

Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.36 times less return on investment than Visa. In addition to that, GFL ENVIRONM is 1.74 times more volatile than Visa Inc. It trades about 0.04 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.09 per unit of volatility. If you would invest  20,609  in Visa Inc on September 14, 2024 and sell it today you would earn a total of  9,431  from holding Visa Inc or generate 45.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

GFL ENVIRONM  vs.  Visa Inc

 Performance 
       Timeline  
GFL ENVIRONM 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.
Visa Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

GFL ENVIRONM and Visa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GFL ENVIRONM and Visa

The main advantage of trading using opposite GFL ENVIRONM and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.
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The idea behind GFL ENVIRONM and Visa Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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