Correlation Between Waste Management and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both Waste Management and Genco Shipping 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 Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Genco Shipping Trading, you can compare the effects of market volatilities on Waste Management and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Genco Shipping.
Diversification Opportunities for Waste Management and Genco Shipping
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and Genco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Waste Management i.e., Waste Management and Genco Shipping go up and down completely randomly.
Pair Corralation between Waste Management and Genco Shipping
Assuming the 90 days trading horizon Waste Management is expected to generate 0.42 times more return on investment than Genco Shipping. However, Waste Management is 2.41 times less risky than Genco Shipping. It trades about 0.08 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.01 per unit of risk. If you would invest 13,620 in Waste Management on October 30, 2024 and sell it today you would earn a total of 6,665 from holding Waste Management or generate 48.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Genco Shipping Trading
Performance |
| Timeline |
| Waste Management |
| Genco Shipping Trading |
Waste Management and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Genco Shipping
The main advantage of trading using opposite Waste Management and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.| Waste Management vs. MARKET VECTR RETAIL | Waste Management vs. NXP Semiconductors NV | Waste Management vs. Hua Hong Semiconductor | Waste Management vs. CANON MARKETING JP |
| Genco Shipping vs. Hisense Home Appliances | Genco Shipping vs. Alaska Air Group | Genco Shipping vs. Delta Air Lines | Genco Shipping vs. Ryanair Holdings plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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