Correlation Between G8 EDUCATION and Waste Connections

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Waste Connections 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 G8 EDUCATION and Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and Waste Connections, you can compare the effects of market volatilities on G8 EDUCATION and Waste Connections 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 G8 EDUCATION with a short position of Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Waste Connections.

Diversification Opportunities for G8 EDUCATION and Waste Connections

0.65

Correlation Coefficient

G8 EDUCATION  Waste Connections

Poor diversification

The 3 months correlation between 3EAG and Waste is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Waste Connections go up and down completely randomly.

Pair Corralation between G8 EDUCATION and Waste Connections

Assuming the 90 days trading horizon G8 EDUCATION is expected to under-perform the Waste Connections. In addition to that, G8 EDUCATION is 1.47 times more volatile than Waste Connections. It trades about -0.02 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.11 per unit of volatility. If you would invest  16,408  in Waste Connections on December 24, 2024 and sell it today you would earn a total of  1,082  from holding Waste Connections or generate 6.59% return on investment over 90 days.

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

G8 EDUCATION  vs.  Waste Connections

G8 EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, G8 EDUCATION is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Waste Connections

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with G8 EDUCATION and Waste Connections

The main advantage of trading using opposite G8 EDUCATION and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' long position.

The idea behind G8 EDUCATION and Waste Connections 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.