Correlation Between GFL ENVIRONM and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and INVITATION HOMES 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 INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and INVITATION HOMES DL, you can compare the effects of market volatilities on GFL ENVIRONM and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and INVITATION HOMES.
Diversification Opportunities for GFL ENVIRONM and INVITATION HOMES
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GFL and INVITATION is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and INVITATION HOMES go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and INVITATION HOMES
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.1 times more return on investment than INVITATION HOMES. However, GFL ENVIRONM is 1.1 times more volatile than INVITATION HOMES DL. It trades about 0.09 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.03 per unit of risk. If you would invest 3,537 in GFL ENVIRONM on October 13, 2024 and sell it today you would earn a total of 723.00 from holding GFL ENVIRONM or generate 20.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. INVITATION HOMES DL
Performance |
| Timeline |
| GFL ENVIRONM |
| INVITATION HOMES |
GFL ENVIRONM and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and INVITATION HOMES
The main advantage of trading using opposite GFL ENVIRONM and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| GFL ENVIRONM vs. InterContinental Hotels Group | GFL ENVIRONM vs. PPHE HOTEL GROUP | GFL ENVIRONM vs. Webster Financial | GFL ENVIRONM vs. NH HOTEL GROUP |
| INVITATION HOMES vs. SPORT LISBOA E | INVITATION HOMES vs. Transport International Holdings | INVITATION HOMES vs. Salesforce | INVITATION HOMES vs. Columbia Sportswear |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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