Correlation Between Waste Management and NEXA RESOURCES
Can any of the company-specific risk be diversified away by investing in both Waste Management and NEXA RESOURCES 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 NEXA RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and NEXA RESOURCES SA, you can compare the effects of market volatilities on Waste Management and NEXA RESOURCES 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 NEXA RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and NEXA RESOURCES.
Diversification Opportunities for Waste Management and NEXA RESOURCES
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and NEXA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and NEXA RESOURCES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXA RESOURCES SA 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 NEXA RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXA RESOURCES SA has no effect on the direction of Waste Management i.e., Waste Management and NEXA RESOURCES go up and down completely randomly.
Pair Corralation between Waste Management and NEXA RESOURCES
Assuming the 90 days trading horizon Waste Management is expected to generate 0.61 times more return on investment than NEXA RESOURCES. However, Waste Management is 1.64 times less risky than NEXA RESOURCES. It trades about 0.1 of its potential returns per unit of risk. NEXA RESOURCES SA is currently generating about 0.02 per unit of risk. If you would invest 18,254 in Waste Management on September 1, 2024 and sell it today you would earn a total of 3,331 from holding Waste Management or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Waste Management vs. NEXA RESOURCES SA
Performance |
| Timeline |
| Waste Management |
| NEXA RESOURCES SA |
Waste Management and NEXA RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and NEXA RESOURCES
The main advantage of trading using opposite Waste Management and NEXA RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, NEXA RESOURCES 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 NEXA RESOURCES will offset losses from the drop in NEXA RESOURCES'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 |
| NEXA RESOURCES vs. Apollo Medical Holdings | NEXA RESOURCES vs. COMMERCIAL VEHICLE | NEXA RESOURCES vs. AVITA Medical | NEXA RESOURCES vs. ONWARD MEDICAL BV |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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