Correlation Between CompX International and Waste Connections

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

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

Diversification Opportunities for CompX International and Waste Connections

-0.67

Correlation Coefficient

CompX International  Waste Connections

Excellent diversification

The 3 months correlation between CompX and Waste is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and CompX International 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 CompX International 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 CompX International i.e., CompX International and Waste Connections go up and down completely randomly.

Pair Corralation between CompX International and Waste Connections

Considering the 90-day investment horizon CompX International is expected to under-perform the Waste Connections. In addition to that, CompX International is 2.81 times more volatile than Waste Connections. It trades about -0.1 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.21 per unit of volatility. If you would invest  17,098  in Waste Connections on December 27, 2024 and sell it today you would earn a total of  2,293  from holding Waste Connections or generate 13.41% return on investment over 90 days.

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

CompX International  vs.  Waste Connections

CompX International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Waste Connections displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompX International and Waste Connections

The main advantage of trading using opposite CompX International and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International 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 CompX International 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.