Correlation Between Waste Management and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both Waste Management and Northstar 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 Northstar 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 Northstar Clean Technologies, you can compare the effects of market volatilities on Waste Management and Northstar 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 Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Northstar Clean.
Diversification Opportunities for Waste Management and Northstar Clean
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and Northstar is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Waste Management i.e., Waste Management and Northstar Clean go up and down completely randomly.
Pair Corralation between Waste Management and Northstar Clean
Allowing for the 90-day total investment horizon Waste Management is expected to generate 2.4 times less return on investment than Northstar Clean. But when comparing it to its historical volatility, Waste Management is 4.62 times less risky than Northstar Clean. It trades about 0.09 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Northstar Clean Technologies on November 27, 2024 and sell it today you would earn a total of 12.00 from holding Northstar Clean Technologies or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Waste Management vs. Northstar Clean Technologies
Performance |
| Timeline |
| Waste Management |
| Northstar Clean Tech |
Waste Management and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Northstar Clean
The main advantage of trading using opposite Waste Management and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Northstar 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 Northstar Clean will offset losses from the drop in Northstar 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 |
| Northstar Clean vs. Susglobal Energy Corp | Northstar Clean vs. LanzaTech Global | Northstar Clean vs. Aqua Metals | Northstar Clean vs. LiCycle Holdings Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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