Correlation Between Casella Waste and McCormick Company

Can any of the company-specific risk be diversified away by investing in both Casella Waste and McCormick Company 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 McCormick Company 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 McCormick Company Incorporated, you can compare the effects of market volatilities on Casella Waste and McCormick Company 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 McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and McCormick Company.

Diversification Opportunities for Casella Waste and McCormick Company

0.29

Correlation Coefficient

Casella Waste  McCormick Company

Modest diversification

The 3 months correlation between Casella and McCormick is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Casella Waste i.e., Casella Waste and McCormick Company go up and down completely randomly.

Pair Corralation between Casella Waste and McCormick Company

Given the investment horizon of 90 days Casella Waste is expected to generate 1.43 times less return on investment than McCormick Company. In addition to that, Casella Waste is 1.02 times more volatile than McCormick Company Incorporated. It trades about 0.06 of its total potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.08 per unit of volatility. If you would invest  7,552  in McCormick Company Incorporated on December 30, 2024 and sell it today you would earn a total of  575.00  from holding McCormick Company Incorporated or generate 7.61% return on investment over 90 days.

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

Casella Waste Systems  vs.  McCormick Company Incorporated

Casella Waste Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 4 (%) 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.

McCormick Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in McCormick Company Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, McCormick Company may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Casella Waste and McCormick Company

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

The idea behind Casella Waste Systems and McCormick Company Incorporated 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 Transaction History module to view history of all your transactions and understand their impact on performance.