Correlation Between Critic Clothing and Republic Services

Can any of the company-specific risk be diversified away by investing in both Critic Clothing and Republic Services 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 Critic Clothing and Republic Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Critic Clothing and Republic Services

-0.33

Correlation Coefficient

Critic Clothing  Republic Services

Very good diversification

The 3 months correlation between Critic and Republic is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Critic Clothing and Republic Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Services and Critic Clothing 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 Critic Clothing are associated (or correlated) with Republic Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Services has no effect on the direction of Critic Clothing i.e., Critic Clothing and Republic Services go up and down completely randomly.

Pair Corralation between Critic Clothing and Republic Services

Given the investment horizon of 90 days Critic Clothing is expected to generate 110.69 times more return on investment than Republic Services. However, Critic Clothing is 110.69 times more volatile than Republic Services. It trades about 0.13 of its potential returns per unit of risk. Republic Services is currently generating about 0.12 per unit of risk. If you would invest  45.00  in Critic Clothing on September 10, 2024 and sell it today you would lose (43.00) from holding Critic Clothing or give up 95.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.27%
Values	Daily Returns

Critic Clothing  vs.  Republic Services

Critic Clothing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Critic Clothing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Critic Clothing reported solid returns over the last few months and may actually be approaching a breakup point.

Republic Services

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Republic Services is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Critic Clothing and Republic Services

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

The idea behind Critic Clothing and Republic Services 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.