Correlation Between Gfl Environmental and Cummins
Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and Cummins 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 Cummins 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 Cummins, you can compare the effects of market volatilities on Gfl Environmental and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and Cummins.
Diversification Opportunities for Gfl Environmental and Cummins
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gfl and Cummins is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Cummins go up and down completely randomly.
Pair Corralation between Gfl Environmental and Cummins
Considering the 90-day investment horizon Gfl Environmental is expected to generate 1.1 times less return on investment than Cummins. In addition to that, Gfl Environmental is 1.14 times more volatile than Cummins. It trades about 0.06 of its total potential returns per unit of risk. Cummins is currently generating about 0.07 per unit of volatility. If you would invest 23,830 in Cummins on August 27, 2024 and sell it today you would earn a total of 13,432 from holding Cummins or generate 56.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gfl Environmental Holdings vs. Cummins
Performance |
| Timeline |
| Gfl Environmental |
| Cummins |
Gfl Environmental and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfl Environmental and Cummins
The main advantage of trading using opposite Gfl Environmental and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfl Environmental position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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