Correlation Between IShares Fundamental and Gfl Environmental

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

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

Diversification Opportunities for IShares Fundamental and Gfl Environmental

0.69

Correlation Coefficient

IShares Fundamental  Gfl Environmental

Poor diversification

The 3 months correlation between IShares and Gfl is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and IShares Fundamental 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 iShares Fundamental Hedged 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 IShares Fundamental i.e., IShares Fundamental and Gfl Environmental go up and down completely randomly.

Pair Corralation between IShares Fundamental and Gfl Environmental

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 90.25 times less return on investment than Gfl Environmental. But when comparing it to its historical volatility, iShares Fundamental Hedged is 1.99 times less risky than Gfl Environmental. It trades about 0.0 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,395  in Gfl Environmental Holdings on September 30, 2024 and sell it today you would earn a total of  1,033  from holding Gfl Environmental Holdings or generate 19.15% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Gfl Environmental Holdings

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gfl Environmental

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 15 (%) 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 IShares Fundamental and Gfl Environmental

The main advantage of trading using opposite IShares Fundamental and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental 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 iShares Fundamental Hedged 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.