Correlation Between GFL ENVIRONM(SUBVTSH and Equifax

Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM(SUBVTSH and Equifax 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 GFL ENVIRONM(SUBVTSH and Equifax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GFL ENVIRONM and Equifax, you can compare the effects of market volatilities on GFL ENVIRONM(SUBVTSH and Equifax 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 GFL ENVIRONM(SUBVTSH with a short position of Equifax. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM(SUBVTSH and Equifax.

Diversification Opportunities for GFL ENVIRONM(SUBVTSH and Equifax

-0.38

Correlation Coefficient

GFL ENVIRONM(SUBVTSH  Equifax

Very good diversification

The 3 months correlation between GFL and Equifax is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and GFL ENVIRONM(SUBVTSH 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 GFL ENVIRONM are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of GFL ENVIRONM(SUBVTSH i.e., GFL ENVIRONM(SUBVTSH and Equifax go up and down completely randomly.

Pair Corralation between GFL ENVIRONM(SUBVTSH and Equifax

Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Equifax. But the stock apears to be less risky and, when comparing its historical volatility, GFL ENVIRONM is 1.18 times less risky than Equifax. The stock trades about -0.09 of its potential returns per unit of risk. The Equifax is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  24,560  in Equifax on December 1, 2024 and sell it today you would lose (1,360) from holding Equifax or give up 5.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GFL ENVIRONM  vs.  Equifax

GFL ENVIRONM(SUBVTSH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GFL ENVIRONM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Equifax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equifax is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GFL ENVIRONM(SUBVTSH and Equifax

The main advantage of trading using opposite GFL ENVIRONM(SUBVTSH and Equifax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM(SUBVTSH position performs unexpectedly, Equifax 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 Equifax will offset losses from the drop in Equifax's long position.

The idea behind GFL ENVIRONM and Equifax pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.