Correlation Between Waste Management and Capital Clean
Can any of the company-specific risk be diversified away by investing in both Waste Management and Capital Clean 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 Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Capital Clean Energy, you can compare the effects of market volatilities on Waste Management and Capital Clean 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 Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Capital Clean.
Diversification Opportunities for Waste Management and Capital Clean
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Waste and Capital is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy 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 Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Waste Management i.e., Waste Management and Capital Clean go up and down completely randomly.
Pair Corralation between Waste Management and Capital Clean
Allowing for the 90-day total investment horizon Waste Management is expected to generate 1.3 times less return on investment than Capital Clean. But when comparing it to its historical volatility, Waste Management is 1.85 times less risky than Capital Clean. It trades about 0.11 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,295 in Capital Clean Energy on September 3, 2024 and sell it today you would earn a total of 535.00 from holding Capital Clean Energy or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Capital Clean Energy
Performance |
| Timeline |
| Waste Management |
| Capital Clean Energy |
Waste Management and Capital Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Capital Clean
The main advantage of trading using opposite Waste Management and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Capital Clean 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 Capital Clean will offset losses from the drop in Capital Clean'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 |
| Capital Clean vs. Electrovaya Common Shares | Capital Clean vs. Zoom Video Communications | Capital Clean vs. Videolocity International | Capital Clean vs. Hurco Companies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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