Correlation Between EcoPlus and Casella Waste
Can any of the company-specific risk be diversified away by investing in both EcoPlus and Casella Waste 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 EcoPlus and Casella Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EcoPlus and Casella Waste Systems, you can compare the effects of market volatilities on EcoPlus and Casella Waste 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 EcoPlus with a short position of Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of EcoPlus and Casella Waste.
Diversification Opportunities for EcoPlus and Casella Waste
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EcoPlus and Casella is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EcoPlus and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems and EcoPlus 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 EcoPlus are associated (or correlated) with Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of EcoPlus i.e., EcoPlus and Casella Waste go up and down completely randomly.
Pair Corralation between EcoPlus and Casella Waste
Given the investment horizon of 90 days EcoPlus is expected to generate 22.59 times more return on investment than Casella Waste. However, EcoPlus is 22.59 times more volatile than Casella Waste Systems. It trades about 0.12 of its potential returns per unit of risk. Casella Waste Systems is currently generating about 0.06 per unit of risk. If you would invest 3.26 in EcoPlus on November 27, 2024 and sell it today you would lose (1.76) from holding EcoPlus or give up 53.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 51.12% |
| Values | Daily Returns |
EcoPlus vs. Casella Waste Systems
Performance |
| Timeline |
| EcoPlus |
| Casella Waste Systems |
EcoPlus and Casella Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EcoPlus and Casella Waste
The main advantage of trading using opposite EcoPlus and Casella Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EcoPlus position performs unexpectedly, Casella Waste 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 Casella Waste will offset losses from the drop in Casella Waste's long position.The idea behind EcoPlus and Casella Waste Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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