Correlation Between Clean Harbors and Shift4 Payments
Can any of the company-specific risk be diversified away by investing in both Clean Harbors and Shift4 Payments 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 Clean Harbors and Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Harbors and Shift4 Payments, you can compare the effects of market volatilities on Clean Harbors and Shift4 Payments 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 Clean Harbors with a short position of Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Harbors and Shift4 Payments.
Diversification Opportunities for Clean Harbors and Shift4 Payments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clean and Shift4 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments and Clean Harbors 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 Clean Harbors are associated (or correlated) with Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of Clean Harbors i.e., Clean Harbors and Shift4 Payments go up and down completely randomly.
Pair Corralation between Clean Harbors and Shift4 Payments
Considering the 90-day investment horizon Clean Harbors is expected to generate 6.65 times less return on investment than Shift4 Payments. But when comparing it to its historical volatility, Clean Harbors is 1.05 times less risky than Shift4 Payments. It trades about 0.04 of its potential returns per unit of risk. Shift4 Payments is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,575 in Shift4 Payments on August 26, 2024 and sell it today you would earn a total of 2,403 from holding Shift4 Payments or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Harbors vs. Shift4 Payments
Performance |
| Timeline |
| Clean Harbors |
| Shift4 Payments |
Clean Harbors and Shift4 Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Harbors and Shift4 Payments
The main advantage of trading using opposite Clean Harbors and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Harbors position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.| Clean Harbors vs. Waste Connections | Clean Harbors vs. Casella Waste Systems | Clean Harbors vs. Waste Management | Clean Harbors vs. Gfl Environmental Holdings |
| Shift4 Payments vs. SentinelOne | Shift4 Payments vs. Confluent | Shift4 Payments vs. Hashicorp | Shift4 Payments vs. MongoDB |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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