Correlation Between Waste Management and John Bean
Can any of the company-specific risk be diversified away by investing in both Waste Management and John Bean 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 John Bean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and John Bean Technologies, you can compare the effects of market volatilities on Waste Management and John Bean 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 John Bean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and John Bean.
Diversification Opportunities for Waste Management and John Bean
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Waste and John is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies 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 John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of Waste Management i.e., Waste Management and John Bean go up and down completely randomly.
Pair Corralation between Waste Management and John Bean
Assuming the 90 days trading horizon Waste Management is expected to generate 2.01 times less return on investment than John Bean. But when comparing it to its historical volatility, Waste Management is 1.98 times less risky than John Bean. It trades about 0.27 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,550 in John Bean Technologies on August 30, 2024 and sell it today you would earn a total of 3,050 from holding John Bean Technologies or generate 35.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. John Bean Technologies
Performance |
| Timeline |
| Waste Management |
| John Bean Technologies |
Waste Management and John Bean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and John Bean
The main advantage of trading using opposite Waste Management and John Bean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, John Bean 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 John Bean will offset losses from the drop in John Bean's long position.| Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Superior Plus Corp | Waste Management vs. SIVERS SEMICONDUCTORS AB |
| John Bean vs. Waste Management | John Bean vs. CEOTRONICS | John Bean vs. Ares Management Corp | John Bean vs. CompuGroup Medical SE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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