Correlation Between Waste Management and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Waste Management and DFS Furniture 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 DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and DFS Furniture PLC, you can compare the effects of market volatilities on Waste Management and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and DFS Furniture.
Diversification Opportunities for Waste Management and DFS Furniture
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Waste and DFS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Waste Management i.e., Waste Management and DFS Furniture go up and down completely randomly.
Pair Corralation between Waste Management and DFS Furniture
Assuming the 90 days trading horizon Waste Management is expected to generate 0.35 times more return on investment than DFS Furniture. However, Waste Management is 2.88 times less risky than DFS Furniture. It trades about 0.03 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.15 per unit of risk. If you would invest 20,125 in Waste Management on October 16, 2024 and sell it today you would earn a total of 95.00 from holding Waste Management or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. DFS Furniture PLC
Performance |
| Timeline |
| Waste Management |
| DFS Furniture PLC |
Waste Management and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and DFS Furniture
The main advantage of trading using opposite Waste Management and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Waste Management vs. Fortescue Metals Group | Waste Management vs. KIMBALL ELECTRONICS | Waste Management vs. Nanjing Panda Electronics | Waste Management vs. CHRYSALIS INVESTMENTS LTD |
| DFS Furniture vs. Japan Tobacco | DFS Furniture vs. Siamgas And Petrochemicals | DFS Furniture vs. The Yokohama Rubber | DFS Furniture vs. SOLSTAD OFFSHORE NK |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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