Correlation Between Casella Waste and Waste Management
Can any of the company-specific risk be diversified away by investing in both Casella Waste 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 Casella Waste and Waste Management 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 Waste Management, you can compare the effects of market volatilities on Casella Waste 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 Casella Waste with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and Waste Management.
Diversification Opportunities for Casella Waste and Waste Management
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Casella and Waste is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 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 Casella Waste i.e., Casella Waste and Waste Management go up and down completely randomly.
Pair Corralation between Casella Waste and Waste Management
Given the investment horizon of 90 days Casella Waste is expected to generate 1.13 times less return on investment than Waste Management. In addition to that, Casella Waste is 1.36 times more volatile than Waste Management. It trades about 0.06 of its total potential returns per unit of risk. Waste Management is currently generating about 0.09 per unit of volatility. If you would invest 14,755 in Waste Management on August 27, 2024 and sell it today you would earn a total of 7,686 from holding Waste Management or generate 52.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Casella Waste Systems vs. Waste Management
Performance |
| Timeline |
| Casella Waste Systems |
| Waste Management |
Casella Waste and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casella Waste and Waste Management
The main advantage of trading using opposite Casella Waste and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casella Waste 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.| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
| Waste Management vs. Genpact Limited | Waste Management vs. Broadridge Financial Solutions | Waste Management vs. First Advantage Corp | Waste Management vs. Franklin Covey |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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