Correlation Between Waste Management and American National
Can any of the company-specific risk be diversified away by investing in both Waste Management and American National 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 American National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and American National Group, you can compare the effects of market volatilities on Waste Management and American National 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 American National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and American National.
Diversification Opportunities for Waste Management and American National
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Waste and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and American National Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American National 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 American National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American National has no effect on the direction of Waste Management i.e., Waste Management and American National go up and down completely randomly.
Pair Corralation between Waste Management and American National
Allowing for the 90-day total investment horizon Waste Management is expected to generate 1.43 times more return on investment than American National. However, Waste Management is 1.43 times more volatile than American National Group. It trades about 0.09 of its potential returns per unit of risk. American National Group is currently generating about 0.05 per unit of risk. If you would invest 15,944 in Waste Management on August 31, 2024 and sell it today you would earn a total of 6,878 from holding Waste Management or generate 43.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Waste Management vs. American National Group
Performance |
| Timeline |
| Waste Management |
| American National |
Waste Management and American National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and American National
The main advantage of trading using opposite Waste Management and American National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, American National 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 American National will offset losses from the drop in American National's long position.| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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