Correlation Between Element Solutions and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both Element Solutions 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 Element Solutions and GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and GFL ENVIRONM, you can compare the effects of market volatilities on Element Solutions 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 Element Solutions with a short position of GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and GFL ENVIRONM.
Diversification Opportunities for Element Solutions and GFL ENVIRONM
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Element and GFL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and Element Solutions 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 Element Solutions 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 Element Solutions i.e., Element Solutions and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between Element Solutions and GFL ENVIRONM
Assuming the 90 days horizon Element Solutions is expected to under-perform the GFL ENVIRONM. In addition to that, Element Solutions is 1.27 times more volatile than GFL ENVIRONM. It trades about -0.17 of its total potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.02 per unit of volatility. If you would invest 4,340 in GFL ENVIRONM on September 21, 2024 and sell it today you would earn a total of 20.00 from holding GFL ENVIRONM or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. GFL ENVIRONM
Performance |
| Timeline |
| Element Solutions |
| GFL ENVIRONM |
Element Solutions and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and GFL ENVIRONM
The main advantage of trading using opposite Element Solutions and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions 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.| Element Solutions vs. GFL ENVIRONM | Element Solutions vs. RELIANCE STEEL AL | Element Solutions vs. Entravision Communications | Element Solutions vs. Caltagirone SpA |
| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB | GFL ENVIRONM vs. NorAm Drilling AS |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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