Correlation Between Genpact and Waste Connections
Can any of the company-specific risk be diversified away by investing in both Genpact and Waste Connections 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 Genpact and Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Waste Connections, you can compare the effects of market volatilities on Genpact and Waste Connections 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 Genpact with a short position of Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Waste Connections.
Diversification Opportunities for Genpact and Waste Connections
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genpact and Waste is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Genpact 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 Genpact Limited are associated (or correlated) with Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of Genpact i.e., Genpact and Waste Connections go up and down completely randomly.
Pair Corralation between Genpact and Waste Connections
Taking into account the 90-day investment horizon Genpact is expected to generate 1.31 times less return on investment than Waste Connections. In addition to that, Genpact is 1.69 times more volatile than Waste Connections. It trades about 0.04 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.1 per unit of volatility. If you would invest 13,455 in Waste Connections on August 31, 2024 and sell it today you would earn a total of 5,792 from holding Waste Connections or generate 43.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. Waste Connections
Performance |
| Timeline |
| Genpact Limited |
| Waste Connections |
Genpact and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and Waste Connections
The main advantage of trading using opposite Genpact and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Waste Connections 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 Connections will offset losses from the drop in Waste Connections' long position.| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService Holdings |
| Waste Connections vs. Clean Harbors | Waste Connections vs. Casella Waste Systems | Waste Connections vs. Waste Management | Waste Connections vs. Gfl Environmental Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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