Correlation Between Falcon Energy and Gfl Environmental

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

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

Diversification Opportunities for Falcon Energy and Gfl Environmental

-0.58

Correlation Coefficient

Falcon Energy  Gfl Environmental

Excellent diversification

The 3 months correlation between Falcon and Gfl is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Falcon Energy 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 Falcon Energy Materials 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 Falcon Energy i.e., Falcon Energy and Gfl Environmental go up and down completely randomly.

Pair Corralation between Falcon Energy and Gfl Environmental

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Gfl Environmental. In addition to that, Falcon Energy is 3.06 times more volatile than Gfl Environmental Holdings. It trades about -0.02 of its total potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.09 per unit of volatility. If you would invest  6,428  in Gfl Environmental Holdings on December 26, 2024 and sell it today you would earn a total of  512.00  from holding Gfl Environmental Holdings or generate 7.97% return on investment over 90 days.

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

Falcon Energy Materials  vs.  Gfl Environmental Holdings

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gfl Environmental

Risk-Adjusted Performance

Modest

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

Pair Trading with Falcon Energy and Gfl Environmental

The main advantage of trading using opposite Falcon Energy and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy 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 Falcon Energy Materials 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.