Correlation Between GFL ENVIRONM and Strategic Education
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Strategic Education 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 Strategic Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Strategic Education, you can compare the effects of market volatilities on GFL ENVIRONM and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Strategic Education.
Diversification Opportunities for GFL ENVIRONM and Strategic Education
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and Strategic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Strategic Education go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Strategic Education
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.86 times more return on investment than Strategic Education. However, GFL ENVIRONM is 1.17 times less risky than Strategic Education. It trades about 0.09 of its potential returns per unit of risk. Strategic Education is currently generating about 0.04 per unit of risk. If you would invest 2,755 in GFL ENVIRONM on September 14, 2024 and sell it today you would earn a total of 1,545 from holding GFL ENVIRONM or generate 56.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Strategic Education
Performance |
| Timeline |
| GFL ENVIRONM |
| Strategic Education |
GFL ENVIRONM and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Strategic Education
The main advantage of trading using opposite GFL ENVIRONM and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB | GFL ENVIRONM vs. NorAm Drilling AS |
| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. Laureate Education | Strategic Education vs. Superior Plus Corp | Strategic Education vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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