Correlation Between Amotiv and Gfl Environmental

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

By analyzing existing cross correlation between Amotiv Limited and Gfl Environmental Holdings, you can compare the effects of market volatilities on Amotiv and Gfl Environmental 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 Amotiv with a short position of Gfl Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amotiv and Gfl Environmental.

Diversification Opportunities for Amotiv and Gfl Environmental

-0.89

Correlation Coefficient

Amotiv  Gfl Environmental

Pay attention - limited upside

The 3 months correlation between Amotiv and Gfl is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amotiv Limited and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Amotiv 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 Amotiv Limited are associated (or correlated) with Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Amotiv i.e., Amotiv and Gfl Environmental go up and down completely randomly.

Pair Corralation between Amotiv and Gfl Environmental

Assuming the 90 days trading horizon Amotiv Limited is expected to under-perform the Gfl Environmental. In addition to that, Amotiv is 1.25 times more volatile than Gfl Environmental Holdings. It trades about -0.02 of its total potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.11 per unit of volatility. If you would invest  5,366  in Gfl Environmental Holdings on October 4, 2024 and sell it today you would earn a total of  1,042  from holding Gfl Environmental Holdings or generate 19.42% return on investment over 90 days.

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

Amotiv Limited  vs.  Gfl Environmental Holdings

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amotiv Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amotiv is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Gfl Environmental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gfl Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amotiv and Gfl Environmental

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

The idea behind Amotiv Limited and Gfl Environmental Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.