Correlation Between Waste Management and CRA International
Can any of the company-specific risk be diversified away by investing in both Waste Management and CRA International 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 CRA International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and CRA International, you can compare the effects of market volatilities on Waste Management and CRA International 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 CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and CRA International.
Diversification Opportunities for Waste Management and CRA International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Waste and CRA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International 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 CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of Waste Management i.e., Waste Management and CRA International go up and down completely randomly.
Pair Corralation between Waste Management and CRA International
Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.48 times more return on investment than CRA International. However, Waste Management is 2.07 times less risky than CRA International. It trades about 0.21 of its potential returns per unit of risk. CRA International is currently generating about 0.09 per unit of risk. If you would invest 21,363 in Waste Management on November 28, 2024 and sell it today you would earn a total of 1,506 from holding Waste Management or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. CRA International
Performance |
| Timeline |
| Waste Management |
| CRA International |
Waste Management and CRA International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and CRA International
The main advantage of trading using opposite Waste Management and CRA International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, CRA International 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 CRA International will offset losses from the drop in CRA International'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 |
| CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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