Correlation Between Bright Scholar and Waste Management
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Waste Management 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 Bright Scholar and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Waste Management, you can compare the effects of market volatilities on Bright Scholar and Waste Management 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 Bright Scholar with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Waste Management.
Diversification Opportunities for Bright Scholar and Waste Management
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bright and Waste is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Bright Scholar 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 Bright Scholar Education are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Bright Scholar i.e., Bright Scholar and Waste Management go up and down completely randomly.
Pair Corralation between Bright Scholar and Waste Management
Given the investment horizon of 90 days Bright Scholar Education is expected to generate 5.01 times more return on investment than Waste Management. However, Bright Scholar is 5.01 times more volatile than Waste Management. It trades about 0.07 of its potential returns per unit of risk. Waste Management is currently generating about 0.08 per unit of risk. If you would invest 106.00 in Bright Scholar Education on September 14, 2024 and sell it today you would earn a total of 91.00 from holding Bright Scholar Education or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.51% |
| Values | Daily Returns |
Bright Scholar Education vs. Waste Management
Performance |
| Timeline |
| Bright Scholar Education |
| Waste Management |
Bright Scholar and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Waste Management
The main advantage of trading using opposite Bright Scholar and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Bright Scholar vs. Laureate Education | Bright Scholar vs. American Public Education | Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Adtalem Global Education |
| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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