Correlation Between Waste Connections and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Waste Connections and Labrador Iron 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 Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Connections and Labrador Iron Ore, you can compare the effects of market volatilities on Waste Connections and Labrador Iron 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 Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Connections and Labrador Iron.
Diversification Opportunities for Waste Connections and Labrador Iron
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Waste and Labrador is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Waste Connections i.e., Waste Connections and Labrador Iron go up and down completely randomly.
Pair Corralation between Waste Connections and Labrador Iron
Assuming the 90 days trading horizon Waste Connections is expected to generate 0.73 times more return on investment than Labrador Iron. However, Waste Connections is 1.37 times less risky than Labrador Iron. It trades about 0.1 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.03 per unit of risk. If you would invest 18,805 in Waste Connections on September 12, 2024 and sell it today you would earn a total of 7,519 from holding Waste Connections or generate 39.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Connections vs. Labrador Iron Ore
Performance |
| Timeline |
| Waste Connections |
| Labrador Iron Ore |
Waste Connections and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Connections and Labrador Iron
The main advantage of trading using opposite Waste Connections and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Waste Connections vs. Thomson Reuters Corp | Waste Connections vs. TFI International | Waste Connections vs. CCL Industries | Waste Connections vs. Open Text Corp |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |