Correlation Between Imaflex and Environmental Waste
Can any of the company-specific risk be diversified away by investing in both Imaflex and Environmental 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 Imaflex and Environmental Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imaflex and Environmental Waste International, you can compare the effects of market volatilities on Imaflex and Environmental 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 Imaflex with a short position of Environmental Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imaflex and Environmental Waste.
Diversification Opportunities for Imaflex and Environmental Waste
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Imaflex and Environmental is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Imaflex and Environmental Waste Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmental Waste and Imaflex 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 Imaflex are associated (or correlated) with Environmental Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmental Waste has no effect on the direction of Imaflex i.e., Imaflex and Environmental Waste go up and down completely randomly.
Pair Corralation between Imaflex and Environmental Waste
Assuming the 90 days horizon Imaflex is expected to generate 16.02 times less return on investment than Environmental Waste. But when comparing it to its historical volatility, Imaflex is 6.72 times less risky than Environmental Waste. It trades about 0.03 of its potential returns per unit of risk. Environmental Waste International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Environmental Waste International on September 1, 2024 and sell it today you would lose (3.50) from holding Environmental Waste International or give up 87.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imaflex vs. Environmental Waste Internatio
Performance |
| Timeline |
| Imaflex |
| Environmental Waste |
Imaflex and Environmental Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imaflex and Environmental Waste
The main advantage of trading using opposite Imaflex and Environmental Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imaflex position performs unexpectedly, Environmental 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 Environmental Waste will offset losses from the drop in Environmental Waste's long position.| Imaflex vs. AirIQ Inc | Imaflex vs. NamSys Inc | Imaflex vs. Supremex | Imaflex vs. Atlas Engineered Products |
| Environmental Waste vs. Clear Blue Technologies | Environmental Waste vs. Current Water Technologies | Environmental Waste vs. Thermal Energy International | Environmental Waste vs. Aurora Solar Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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