Correlation Between Waste Management and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Waste Management and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Waste Management and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and GEELY AUTOMOBILE.
Diversification Opportunities for Waste Management and GEELY AUTOMOBILE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and GEELY is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Waste Management i.e., Waste Management and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Waste Management and GEELY AUTOMOBILE
Assuming the 90 days trading horizon Waste Management is expected to generate 3.65 times less return on investment than GEELY AUTOMOBILE. But when comparing it to its historical volatility, Waste Management is 2.51 times less risky than GEELY AUTOMOBILE. It trades about 0.1 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 94.00 in GEELY AUTOMOBILE on September 1, 2024 and sell it today you would earn a total of 74.00 from holding GEELY AUTOMOBILE or generate 78.72% 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. GEELY AUTOMOBILE
Performance |
| Timeline |
| Waste Management |
| GEELY AUTOMOBILE |
Waste Management and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and GEELY AUTOMOBILE
The main advantage of trading using opposite Waste Management and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| Waste Management vs. NTG Nordic Transport | Waste Management vs. PRECISION DRILLING P | Waste Management vs. DAIRY FARM INTL | Waste Management vs. Transportadora de Gas |
| GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. Reliance Steel Aluminum | GEELY AUTOMOBILE vs. Q2M Managementberatung AG |
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 Stocks Directory module to find actively traded stocks across global markets.
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