Correlation Between BP Plc and Waste Management
Can any of the company-specific risk be diversified away by investing in both BP Plc 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 BP Plc and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP plc and Waste Management, you can compare the effects of market volatilities on BP Plc 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 BP Plc with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plc and Waste Management.
Diversification Opportunities for BP Plc and Waste Management
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BSU and Waste is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BP plc and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and BP Plc 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 BP plc 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 BP Plc i.e., BP Plc and Waste Management go up and down completely randomly.
Pair Corralation between BP Plc and Waste Management
Assuming the 90 days trading horizon BP plc is expected to under-perform the Waste Management. In addition to that, BP Plc is 1.33 times more volatile than Waste Management. It trades about 0.0 of its total potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of volatility. If you would invest 15,220 in Waste Management on August 29, 2024 and sell it today you would earn a total of 6,505 from holding Waste Management or generate 42.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP plc vs. Waste Management
Performance |
| Timeline |
| BP plc |
| Waste Management |
BP Plc and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plc and Waste Management
The main advantage of trading using opposite BP Plc and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plc 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.| BP Plc vs. Superior Plus Corp | BP Plc vs. Origin Agritech | BP Plc vs. Identiv | BP Plc vs. INTUITIVE SURGICAL |
| Waste Management vs. Singapore Reinsurance | Waste Management vs. SEKISUI CHEMICAL | Waste Management vs. Universal Insurance Holdings | Waste Management vs. MYFAIR GOLD P |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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