Correlation Between Clean Harbors and Waste Connections

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

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

Diversification Opportunities for Clean Harbors and Waste Connections

-0.52

Correlation Coefficient

Clean Harbors  Waste Connections

Excellent diversification

The 3 months correlation between Clean and Waste is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Clean Harbors 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 Clean Harbors 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 Clean Harbors i.e., Clean Harbors and Waste Connections go up and down completely randomly.

Pair Corralation between Clean Harbors and Waste Connections

Considering the 90-day investment horizon Clean Harbors is expected to under-perform the Waste Connections. In addition to that, Clean Harbors is 1.53 times more volatile than Waste Connections. It trades about -0.16 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.2 per unit of volatility. If you would invest  17,088  in Waste Connections on December 28, 2024 and sell it today you would earn a total of  2,195  from holding Waste Connections or generate 12.85% return on investment over 90 days.

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

Clean Harbors  vs.  Waste Connections

Clean Harbors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Harbors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Waste Connections

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 15 (%) 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 Clean Harbors and Waste Connections

The main advantage of trading using opposite Clean Harbors and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Harbors 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 Clean Harbors 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.