Correlation Between Casella Waste and Montrose Environmental

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

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

Diversification Opportunities for Casella Waste and Montrose Environmental

-0.17

Correlation Coefficient

Casella Waste  Montrose Environmental

Good diversification

The 3 months correlation between Casella and Montrose is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Montrose Environmental Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montrose Environmental and Casella Waste 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 Casella Waste Systems are associated (or correlated) with Montrose Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montrose Environmental has no effect on the direction of Casella Waste i.e., Casella Waste and Montrose Environmental go up and down completely randomly.

Pair Corralation between Casella Waste and Montrose Environmental

Given the investment horizon of 90 days Casella Waste Systems is expected to generate 0.32 times more return on investment than Montrose Environmental. However, Casella Waste Systems is 3.1 times less risky than Montrose Environmental. It trades about 0.05 of its potential returns per unit of risk. Montrose Environmental Grp is currently generating about -0.15 per unit of risk. If you would invest  10,786  in Casella Waste Systems on August 30, 2024 and sell it today you would earn a total of  442.00  from holding Casella Waste Systems or generate 4.1% return on investment over 90 days.

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

Casella Waste Systems  vs.  Montrose Environmental Grp

Casella Waste Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Casella Waste is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Montrose Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montrose Environmental Grp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Casella Waste and Montrose Environmental

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

The idea behind Casella Waste Systems and Montrose Environmental Grp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.