Correlation Between Waste Management and OriginClear
Can any of the company-specific risk be diversified away by investing in both Waste Management and OriginClear 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 OriginClear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and OriginClear, you can compare the effects of market volatilities on Waste Management and OriginClear 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 OriginClear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and OriginClear.
Diversification Opportunities for Waste Management and OriginClear
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Waste and OriginClear is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear 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 OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Waste Management i.e., Waste Management and OriginClear go up and down completely randomly.
Pair Corralation between Waste Management and OriginClear
Allowing for the 90-day total investment horizon Waste Management is expected to generate 2.19 times less return on investment than OriginClear. But when comparing it to its historical volatility, Waste Management is 8.11 times less risky than OriginClear. It trades about 0.09 of its potential returns per unit of risk. OriginClear is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.85 in OriginClear on August 31, 2024 and sell it today you would lose (0.37) from holding OriginClear or give up 43.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Waste Management vs. OriginClear
Performance |
| Timeline |
| Waste Management |
| OriginClear |
Waste Management and OriginClear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and OriginClear
The main advantage of trading using opposite Waste Management and OriginClear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, OriginClear 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 OriginClear will offset losses from the drop in OriginClear'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 |
| OriginClear vs. BacTech Environmental | OriginClear vs. Agilyx AS | OriginClear vs. Avalon Holdings | OriginClear vs. Ambipar Emergency Response |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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