Correlation Between GFL ENVIRONM and Realord Group
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Realord Group 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 Realord Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Realord Group Holdings, you can compare the effects of market volatilities on GFL ENVIRONM and Realord Group 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 Realord Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Realord Group.
Diversification Opportunities for GFL ENVIRONM and Realord Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and Realord is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Realord Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realord Group Holdings 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 Realord Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realord Group Holdings has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Realord Group go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Realord Group
Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Realord Group. But the stock apears to be less risky and, when comparing its historical volatility, GFL ENVIRONM is 1.16 times less risky than Realord Group. The stock trades about -0.18 of its potential returns per unit of risk. The Realord Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Realord Group Holdings on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Realord Group Holdings or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
GFL ENVIRONM vs. Realord Group Holdings
Performance |
| Timeline |
| GFL ENVIRONM |
| Realord Group Holdings |
GFL ENVIRONM and Realord Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Realord Group
The main advantage of trading using opposite GFL ENVIRONM and Realord Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Realord Group 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 Realord Group will offset losses from the drop in Realord Group's long position.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Republic Services | GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Veolia Environnement SA |
| Realord Group vs. INDOFOOD AGRI RES | Realord Group vs. ARDAGH METAL PACDL 0001 | Realord Group vs. FIREWEED METALS P | Realord Group vs. Jacquet Metal Service |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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