Correlation Between Empresa Distribuidora and Gfl Environmental

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

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

Diversification Opportunities for Empresa Distribuidora and Gfl Environmental

0.74

Correlation Coefficient

Empresa Distribuidora  Gfl Environmental

Poor diversification

The 3 months correlation between Empresa and Gfl is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Empresa Distribuidora 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 Empresa Distribuidora y 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 Empresa Distribuidora i.e., Empresa Distribuidora and Gfl Environmental go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Gfl Environmental

Considering the 90-day investment horizon Empresa Distribuidora y is expected to under-perform the Gfl Environmental. In addition to that, Empresa Distribuidora is 5.18 times more volatile than Gfl Environmental Holdings. It trades about -0.21 of its total potential returns per unit of risk. Gfl Environmental Holdings is currently generating about -0.33 per unit of volatility. If you would invest  4,471  in Gfl Environmental Holdings on October 25, 2024 and sell it today you would lose (277.00) from holding Gfl Environmental Holdings or give up 6.2% of portfolio value over 90 days.

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

Empresa Distribuidora y  vs.  Gfl Environmental Holdings

Empresa Distribuidora

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Gfl Environmental

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Gfl Environmental is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Empresa Distribuidora and Gfl Environmental

The main advantage of trading using opposite Empresa Distribuidora and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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 Empresa Distribuidora y 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..