Correlation Between Dell Technologies and Waste Management

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

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

Diversification Opportunities for Dell Technologies and Waste Management

-0.53

Correlation Coefficient

Dell Technologies  Waste Management

Excellent diversification

The 3 months correlation between Dell and Waste is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Dell Technologies 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 Dell Technologies are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Dell Technologies i.e., Dell Technologies and Waste Management go up and down completely randomly.

Pair Corralation between Dell Technologies and Waste Management

Assuming the 90 days trading horizon Dell Technologies is expected to under-perform the Waste Management. In addition to that, Dell Technologies is 3.34 times more volatile than Waste Management. It trades about -0.11 of its total potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of volatility. If you would invest  62,353  in Waste Management on December 30, 2024 and sell it today you would earn a total of  2,648  from holding Waste Management or generate 4.25% return on investment over 90 days.

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

Dell Technologies  vs.  Waste Management

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat 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 Management

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Waste Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dell Technologies and Waste Management

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

The idea behind Dell Technologies and Waste Management 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.