Correlation Between Grupo Carso and GFL ENVIRONM

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

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

Diversification Opportunities for Grupo Carso and GFL ENVIRONM

-0.02

Correlation Coefficient

Grupo Carso  GFL ENVIRONM

Good diversification

The 3 months correlation between Grupo and GFL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and Grupo Carso 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 Grupo Carso SAB are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Grupo Carso i.e., Grupo Carso and GFL ENVIRONM go up and down completely randomly.

Pair Corralation between Grupo Carso and GFL ENVIRONM

Assuming the 90 days horizon Grupo Carso is expected to generate 1.25 times less return on investment than GFL ENVIRONM. In addition to that, Grupo Carso is 2.3 times more volatile than GFL ENVIRONM. It trades about 0.04 of its total potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.11 per unit of volatility. If you would invest  3,537  in GFL ENVIRONM on September 16, 2024 and sell it today you would earn a total of  783.00  from holding GFL ENVIRONM or generate 22.14% return on investment over 90 days.

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

Grupo Carso SAB  vs.  GFL ENVIRONM

Grupo Carso SAB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GFL ENVIRONM

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Carso and GFL ENVIRONM

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

The idea behind Grupo Carso SAB and GFL ENVIRONM 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.