Correlation Between Eguana Technologies and Gfl Environmental

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

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

Diversification Opportunities for Eguana Technologies and Gfl Environmental

0.44

Correlation Coefficient

Eguana Technologies  Gfl Environmental

Very weak diversification

The 3 months correlation between Eguana and Gfl is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Eguana 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 Eguana Technologies 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 Eguana Technologies i.e., Eguana Technologies and Gfl Environmental go up and down completely randomly.

Pair Corralation between Eguana Technologies and Gfl Environmental

Assuming the 90 days horizon Eguana Technologies is expected to generate 10.13 times more return on investment than Gfl Environmental. However, Eguana Technologies is 10.13 times more volatile than Gfl Environmental Holdings. It trades about 0.04 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.06 per unit of risk. If you would invest  25.00  in Eguana Technologies on October 5, 2024 and sell it today you would lose (23.00) from holding Eguana Technologies or give up 92.0% of portfolio value over 90 days.

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

Eguana Technologies  vs.  Gfl Environmental Holdings

Eguana Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Eguana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Gfl Environmental

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gfl Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eguana Technologies and Gfl Environmental

The main advantage of trading using opposite Eguana Technologies and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eguana Technologies 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 Eguana Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.