Correlation Between BANK OF CHINA and Waste Management
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA and Waste Management 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 BANK OF CHINA and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK OF CHINA and Waste Management, you can compare the effects of market volatilities on BANK OF CHINA and Waste Management 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 BANK OF CHINA with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and Waste Management.
Diversification Opportunities for BANK OF CHINA and Waste Management
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BANK and Waste is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and BANK OF CHINA 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 BANK OF CHINA are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of BANK OF CHINA i.e., BANK OF CHINA and Waste Management go up and down completely randomly.
Pair Corralation between BANK OF CHINA and Waste Management
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 6.21 times more return on investment than Waste Management. However, BANK OF CHINA is 6.21 times more volatile than Waste Management. It trades about 0.06 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 15.00 in BANK OF CHINA on October 16, 2024 and sell it today you would earn a total of 32.00 from holding BANK OF CHINA or generate 213.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. Waste Management
Performance |
| Timeline |
| BANK OF CHINA |
| Waste Management |
BANK OF CHINA and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and Waste Management
The main advantage of trading using opposite BANK OF CHINA and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| BANK OF CHINA vs. Direct Line Insurance | BANK OF CHINA vs. Tencent Music Entertainment | BANK OF CHINA vs. Discover Financial Services | BANK OF CHINA vs. Synchrony Financial |
| Waste Management vs. BANK OF CHINA | Waste Management vs. JSC Halyk bank | Waste Management vs. China Datang | Waste Management vs. EIDESVIK OFFSHORE NK |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |