Correlation Between Gfl Environmental and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and AAR Corp 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 Gfl Environmental and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gfl Environmental Holdings and AAR Corp, you can compare the effects of market volatilities on Gfl Environmental and AAR Corp 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 Gfl Environmental with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and AAR Corp.
Diversification Opportunities for Gfl Environmental and AAR Corp
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gfl and AAR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Gfl Environmental 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 Gfl Environmental Holdings are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and AAR Corp go up and down completely randomly.
Pair Corralation between Gfl Environmental and AAR Corp
Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.9 times more return on investment than AAR Corp. However, Gfl Environmental Holdings is 1.11 times less risky than AAR Corp. It trades about 0.07 of its potential returns per unit of risk. AAR Corp is currently generating about 0.05 per unit of risk. If you would invest 2,799 in Gfl Environmental Holdings on August 27, 2024 and sell it today you would earn a total of 1,789 from holding Gfl Environmental Holdings or generate 63.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gfl Environmental Holdings vs. AAR Corp
Performance |
| Timeline |
| Gfl Environmental |
| AAR Corp |
Gfl Environmental and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfl Environmental and AAR Corp
The main advantage of trading using opposite Gfl Environmental and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfl Environmental position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.| Gfl Environmental vs. Clean Harbors | Gfl Environmental vs. Waste Connections | Gfl Environmental vs. Republic Services | Gfl Environmental vs. Casella Waste Systems |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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