Correlation Between Waste Connections and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Waste Connections and CCL Industries 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 Connections and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Connections and CCL Industries, you can compare the effects of market volatilities on Waste Connections and CCL Industries 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 Connections with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Connections and CCL Industries.
Diversification Opportunities for Waste Connections and CCL Industries
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and CCL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Waste Connections 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 Connections are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Waste Connections i.e., Waste Connections and CCL Industries go up and down completely randomly.
Pair Corralation between Waste Connections and CCL Industries
Assuming the 90 days trading horizon Waste Connections is expected to generate 0.7 times more return on investment than CCL Industries. However, Waste Connections is 1.44 times less risky than CCL Industries. It trades about 0.07 of its potential returns per unit of risk. CCL Industries is currently generating about 0.04 per unit of risk. If you would invest 19,399 in Waste Connections on August 23, 2024 and sell it today you would earn a total of 7,003 from holding Waste Connections or generate 36.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Connections vs. CCL Industries
Performance |
| Timeline |
| Waste Connections |
| CCL Industries |
Waste Connections and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Connections and CCL Industries
The main advantage of trading using opposite Waste Connections and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Waste Connections vs. Chesswood Group Limited | Waste Connections vs. Firan Technology Group | Waste Connections vs. Maxim Power Corp |
| CCL Industries vs. Fairfax Financial Holdings | CCL Industries vs. US Financial 15 | CCL Industries vs. Aurora Solar Technologies | CCL Industries vs. Solar Alliance Energy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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