Correlation Between GFL ENVIRONM and Element Solutions
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Element Solutions 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 Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Element Solutions, you can compare the effects of market volatilities on GFL ENVIRONM and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Element Solutions.
Diversification Opportunities for GFL ENVIRONM and Element Solutions
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFL and Element is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Element Solutions go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Element Solutions
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.93 times more return on investment than Element Solutions. However, GFL ENVIRONM is 1.07 times less risky than Element Solutions. It trades about -0.01 of its potential returns per unit of risk. Element Solutions is currently generating about -0.41 per unit of risk. If you would invest 4,360 in GFL ENVIRONM on September 25, 2024 and sell it today you would lose (20.00) from holding GFL ENVIRONM or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Element Solutions
Performance |
| Timeline |
| GFL ENVIRONM |
| Element Solutions |
GFL ENVIRONM and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Element Solutions
The main advantage of trading using opposite GFL ENVIRONM and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| GFL ENVIRONM vs. Games Workshop Group | GFL ENVIRONM vs. GEAR4MUSIC LS 10 | GFL ENVIRONM vs. JAPAN AIRLINES | GFL ENVIRONM vs. Nok Airlines PCL |
| Element Solutions vs. JD SPORTS FASH | Element Solutions vs. PLAYTIKA HOLDING DL 01 | Element Solutions vs. Live Nation Entertainment | Element Solutions vs. Ubisoft Entertainment SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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