Correlation Between Algoma Steel and Gfl Environmental
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Gfl Environmental 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 Algoma Steel and Gfl Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Gfl Environmental Holdings, you can compare the effects of market volatilities on Algoma Steel and Gfl Environmental 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 Algoma Steel with a short position of Gfl Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Gfl Environmental.
Diversification Opportunities for Algoma Steel and Gfl Environmental
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Algoma and Gfl is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Algoma Steel 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 Algoma Steel Group are associated (or correlated) with Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Algoma Steel i.e., Algoma Steel and Gfl Environmental go up and down completely randomly.
Pair Corralation between Algoma Steel and Gfl Environmental
Assuming the 90 days trading horizon Algoma Steel is expected to generate 1.12 times less return on investment than Gfl Environmental. In addition to that, Algoma Steel is 1.32 times more volatile than Gfl Environmental Holdings. It trades about 0.08 of its total potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.12 per unit of volatility. If you would invest 3,936 in Gfl Environmental Holdings on September 1, 2024 and sell it today you would earn a total of 2,705 from holding Gfl Environmental Holdings or generate 68.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Gfl Environmental Holdings
Performance |
| Timeline |
| Algoma Steel Group |
| Gfl Environmental |
Algoma Steel and Gfl Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Gfl Environmental
The main advantage of trading using opposite Algoma Steel and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Gfl Environmental 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 Gfl Environmental will offset losses from the drop in Gfl Environmental's long position.| Algoma Steel vs. First Majestic Silver | Algoma Steel vs. Ivanhoe Energy | Algoma Steel vs. Orezone Gold Corp | Algoma Steel vs. Faraday Copper Corp |
| Gfl Environmental vs. Waste Connections | Gfl Environmental vs. TFI International | Gfl Environmental vs. WSP Global | Gfl Environmental vs. Dye Durham |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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