Correlation Between Waste Management and Casella Waste
Can any of the company-specific risk be diversified away by investing in both Waste Management and Casella 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 Waste Management and Casella Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Casella Waste Systems, you can compare the effects of market volatilities on Waste Management and Casella 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 Waste Management with a short position of Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Casella Waste.
Diversification Opportunities for Waste Management and Casella Waste
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Waste and Casella is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems and Waste Management 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 Waste Management are associated (or correlated) with Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of Waste Management i.e., Waste Management and Casella Waste go up and down completely randomly.
Pair Corralation between Waste Management and Casella Waste
Assuming the 90 days horizon Waste Management is expected to generate 0.68 times more return on investment than Casella Waste. However, Waste Management is 1.47 times less risky than Casella Waste. It trades about 0.24 of its potential returns per unit of risk. Casella Waste Systems is currently generating about 0.15 per unit of risk. If you would invest 18,578 in Waste Management on August 30, 2024 and sell it today you would earn a total of 3,082 from holding Waste Management or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Casella Waste Systems
Performance |
| Timeline |
| Waste Management |
| Casella Waste Systems |
Waste Management and Casella Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Casella Waste
The main advantage of trading using opposite Waste Management and Casella Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Casella 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 Casella Waste will offset losses from the drop in Casella Waste's long position.| Waste Management vs. Waste Connections | Waste Management vs. GFL ENVIRONM | Waste Management vs. Superior Plus Corp | Waste Management vs. SIVERS SEMICONDUCTORS AB |
| Casella Waste vs. Fukuyama Transporting Co | Casella Waste vs. BROADSTNET LEADL 00025 | Casella Waste vs. Sabra Health Care | Casella Waste vs. Texas Roadhouse |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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