Correlation Between Gfl Environmental and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and Eaton PLC 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 Eaton PLC 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 Eaton PLC, you can compare the effects of market volatilities on Gfl Environmental and Eaton PLC 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 Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and Eaton PLC.
Diversification Opportunities for Gfl Environmental and Eaton PLC
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gfl and Eaton is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Eaton PLC go up and down completely randomly.
Pair Corralation between Gfl Environmental and Eaton PLC
Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.9 times more return on investment than Eaton PLC. However, Gfl Environmental Holdings is 1.11 times less risky than Eaton PLC. It trades about 0.37 of its potential returns per unit of risk. Eaton PLC is currently generating about 0.22 per unit of risk. If you would invest 4,009 in Gfl Environmental Holdings on August 27, 2024 and sell it today you would earn a total of 579.00 from holding Gfl Environmental Holdings or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gfl Environmental Holdings vs. Eaton PLC
Performance |
| Timeline |
| Gfl Environmental |
| Eaton PLC |
Gfl Environmental and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfl Environmental and Eaton PLC
The main advantage of trading using opposite Gfl Environmental and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfl Environmental position performs unexpectedly, Eaton PLC 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 Eaton PLC will offset losses from the drop in Eaton PLC's long position.| Gfl Environmental vs. Clean Harbors | Gfl Environmental vs. Waste Connections | Gfl Environmental vs. Republic Services | Gfl Environmental vs. Casella Waste Systems |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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