Correlation Between GFL ENVIRONM and Séché Environnement
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Séché Environnement 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 Séché Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Sch Environnement SA, you can compare the effects of market volatilities on GFL ENVIRONM and Séché Environnement 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 Séché Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Séché Environnement.
Diversification Opportunities for GFL ENVIRONM and Séché Environnement
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GFL and Séché is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Sch Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Séché Environnement 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 Séché Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Séché Environnement has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Séché Environnement go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Séché Environnement
Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Séché Environnement. But the stock apears to be less risky and, when comparing its historical volatility, GFL ENVIRONM is 1.07 times less risky than Séché Environnement. The stock trades about -0.03 of its potential returns per unit of risk. The Sch Environnement SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,800 in Sch Environnement SA on October 13, 2024 and sell it today you would lose (40.00) from holding Sch Environnement SA or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Sch Environnement SA
Performance |
| Timeline |
| GFL ENVIRONM |
| Séché Environnement |
GFL ENVIRONM and Séché Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Séché Environnement
The main advantage of trading using opposite GFL ENVIRONM and Séché Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Séché Environnement 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 Séché Environnement will offset losses from the drop in Séché Environnement'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 |
| Séché Environnement vs. EAGLE MATERIALS | Séché Environnement vs. Applied Materials | Séché Environnement vs. VULCAN MATERIALS | Séché Environnement vs. SILVER BULLET DATA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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