Correlation Between Waste Management and Cable One
Can any of the company-specific risk be diversified away by investing in both Waste Management and Cable One 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 Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Cable One, you can compare the effects of market volatilities on Waste Management and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Cable One.
Diversification Opportunities for Waste Management and Cable One
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Waste and Cable is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Waste Management i.e., Waste Management and Cable One go up and down completely randomly.
Pair Corralation between Waste Management and Cable One
Assuming the 90 days trading horizon Waste Management is expected to generate 0.48 times more return on investment than Cable One. However, Waste Management is 2.1 times less risky than Cable One. It trades about 0.07 of its potential returns per unit of risk. Cable One is currently generating about -0.03 per unit of risk. If you would invest 43,289 in Waste Management on August 24, 2024 and sell it today you would earn a total of 21,674 from holding Waste Management or generate 50.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 70.83% |
| Values | Daily Returns |
Waste Management vs. Cable One
Performance |
| Timeline |
| Waste Management |
| Cable One |
Waste Management and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Cable One
The main advantage of trading using opposite Waste Management and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| Waste Management vs. Ambipar Participaes e | Waste Management vs. Fras le SA | Waste Management vs. Western Digital | Waste Management vs. Clave Indices De |
| Cable One vs. American Airlines Group | Cable One vs. Metalrgica Riosulense SA | Cable One vs. Charter Communications | Cable One vs. Zoom Video Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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