Correlation Between Perma-Fix Environmental and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental and GFL ENVIRONM 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 Perma-Fix Environmental and GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perma Fix Environmental Services and GFL ENVIRONM, you can compare the effects of market volatilities on Perma-Fix Environmental and GFL ENVIRONM 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 Perma-Fix Environmental with a short position of GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and GFL ENVIRONM.
Diversification Opportunities for Perma-Fix Environmental and GFL ENVIRONM
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perma-Fix and GFL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and Perma-Fix 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 Perma Fix Environmental Services are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Perma-Fix Environmental i.e., Perma-Fix Environmental and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between Perma-Fix Environmental and GFL ENVIRONM
Assuming the 90 days trading horizon Perma Fix Environmental Services is expected to generate 2.29 times more return on investment than GFL ENVIRONM. However, Perma-Fix Environmental is 2.29 times more volatile than GFL ENVIRONM. It trades about 0.09 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.05 per unit of risk. If you would invest 350.00 in Perma Fix Environmental Services on August 28, 2024 and sell it today you would earn a total of 1,020 from holding Perma Fix Environmental Services or generate 291.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perma Fix Environmental Servic vs. GFL ENVIRONM
Performance |
| Timeline |
| Perma Fix Environmental |
| GFL ENVIRONM |
Perma-Fix Environmental and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perma-Fix Environmental and GFL ENVIRONM
The main advantage of trading using opposite Perma-Fix Environmental and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings | Perma-Fix Environmental vs. Origin Agritech | Perma-Fix Environmental vs. SIVERS SEMICONDUCTORS AB |
| GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. NMI Holdings | GFL ENVIRONM vs. Origin Agritech | GFL ENVIRONM 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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