Correlation Between Waste Management and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Waste Management and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and NTG Nordic Transport, you can compare the effects of market volatilities on Waste Management and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and NTG Nordic.
Diversification Opportunities for Waste Management and NTG Nordic
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Waste and NTG is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Waste Management i.e., Waste Management and NTG Nordic go up and down completely randomly.
Pair Corralation between Waste Management and NTG Nordic
Assuming the 90 days trading horizon Waste Management is expected to generate 0.64 times more return on investment than NTG Nordic. However, Waste Management is 1.56 times less risky than NTG Nordic. It trades about 0.1 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.0 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. NTG Nordic Transport
Performance |
| Timeline |
| Waste Management |
| NTG Nordic Transport |
Waste Management and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and NTG Nordic
The main advantage of trading using opposite Waste Management and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic'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 |
| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. Origin Agritech | NTG Nordic vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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