Correlation Between Stericycle and Waste Management
Can any of the company-specific risk be diversified away by investing in both Stericycle 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 Stericycle and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stericycle and Waste Management, you can compare the effects of market volatilities on Stericycle 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 Stericycle with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stericycle and Waste Management.
Diversification Opportunities for Stericycle and Waste Management
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stericycle and Waste is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Stericycle and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Stericycle 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 Stericycle 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 Stericycle i.e., Stericycle and Waste Management go up and down completely randomly.
Pair Corralation between Stericycle and Waste Management
Given the investment horizon of 90 days Stericycle is expected to generate 6.28 times less return on investment than Waste Management. But when comparing it to its historical volatility, Stericycle is 1.05 times less risky than Waste Management. It trades about 0.04 of its potential returns per unit of risk. Waste Management is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 20,826 in Waste Management on August 27, 2024 and sell it today you would earn a total of 1,739 from holding Waste Management or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Stericycle vs. Waste Management
Performance |
| Timeline |
| Stericycle |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Waste Management |
Stericycle and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stericycle and Waste Management
The main advantage of trading using opposite Stericycle and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stericycle 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.| Stericycle vs. Clean Harbors | Stericycle vs. Waste Connections | Stericycle vs. Casella Waste Systems | Stericycle vs. Montrose Environmental Grp |
| Waste Management vs. Genpact Limited | Waste Management vs. Broadridge Financial Solutions | Waste Management vs. First Advantage Corp | Waste Management vs. Franklin Covey |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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