Correlation Between GFL ENVIRONM and Auckland International
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Auckland International 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 Auckland International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Auckland International Airport, you can compare the effects of market volatilities on GFL ENVIRONM and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Auckland International.
Diversification Opportunities for GFL ENVIRONM and Auckland International
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GFL and Auckland is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Auckland International go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Auckland International
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.43 times more return on investment than Auckland International. However, GFL ENVIRONM is 1.43 times more volatile than Auckland International Airport. It trades about 0.06 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.02 per unit of risk. If you would invest 2,691 in GFL ENVIRONM on September 3, 2024 and sell it today you would earn a total of 1,709 from holding GFL ENVIRONM or generate 63.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Auckland International Airport
Performance |
| Timeline |
| GFL ENVIRONM |
| Auckland International |
GFL ENVIRONM and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Auckland International
The main advantage of trading using opposite GFL ENVIRONM and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| GFL ENVIRONM vs. TIANDE CHEMICAL | GFL ENVIRONM vs. PennyMac Mortgage Investment | GFL ENVIRONM vs. KINGBOARD CHEMICAL | GFL ENVIRONM vs. SEI INVESTMENTS |
| Auckland International vs. GFL ENVIRONM | Auckland International vs. CVS Health | Auckland International vs. NIPPON STEEL SPADR | Auckland International vs. Nippon Steel |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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