Correlation Between Casella Waste and Stericycle
Can any of the company-specific risk be diversified away by investing in both Casella Waste and Stericycle 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 Casella Waste and Stericycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casella Waste Systems and Stericycle, you can compare the effects of market volatilities on Casella Waste and Stericycle 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 Casella Waste with a short position of Stericycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and Stericycle.
Diversification Opportunities for Casella Waste and Stericycle
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Casella and Stericycle is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Stericycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stericycle and Casella Waste 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 Casella Waste Systems are associated (or correlated) with Stericycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stericycle has no effect on the direction of Casella Waste i.e., Casella Waste and Stericycle go up and down completely randomly.
Pair Corralation between Casella Waste and Stericycle
Given the investment horizon of 90 days Casella Waste is expected to generate 1.55 times less return on investment than Stericycle. But when comparing it to its historical volatility, Casella Waste Systems is 1.56 times less risky than Stericycle. It trades about 0.05 of its potential returns per unit of risk. Stericycle is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,092 in Stericycle on August 28, 2024 and sell it today you would earn a total of 2,758 from holding Stericycle or generate 54.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.18% |
| Values | Daily Returns |
Casella Waste Systems vs. Stericycle
Performance |
| Timeline |
| Casella Waste Systems |
| Stericycle |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Casella Waste and Stericycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casella Waste and Stericycle
The main advantage of trading using opposite Casella Waste and Stericycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casella Waste position performs unexpectedly, Stericycle 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 Stericycle will offset losses from the drop in Stericycle's long position.| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
| Stericycle vs. Clean Harbors | Stericycle vs. Waste Connections | Stericycle vs. Casella Waste Systems | Stericycle vs. Montrose Environmental Grp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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