Correlation Between FLOW TRADERS and Waste Management
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and Waste Management 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 FLOW TRADERS and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Waste Management, you can compare the effects of market volatilities on FLOW TRADERS and Waste Management 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 FLOW TRADERS with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Waste Management.
Diversification Opportunities for FLOW TRADERS and Waste Management
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and Waste is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and Waste Management go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Waste Management
Assuming the 90 days horizon FLOW TRADERS is expected to generate 10.64 times less return on investment than Waste Management. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.06 times less risky than Waste Management. It trades about 0.02 of its potential returns per unit of risk. Waste Management is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 20,175 in Waste Management on August 30, 2024 and sell it today you would earn a total of 1,430 from holding Waste Management or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Waste Management
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Waste Management |
FLOW TRADERS and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Waste Management
The main advantage of trading using opposite FLOW TRADERS and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, Waste Management 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 Management will offset losses from the drop in Waste Management's long position.| FLOW TRADERS vs. MSCI Inc | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings | FLOW TRADERS vs. SIVERS SEMICONDUCTORS AB |
| Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Superior Plus Corp | Waste Management vs. SIVERS SEMICONDUCTORS AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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