Correlation Between Gladstone Investment and Waste Management

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

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

Diversification Opportunities for Gladstone Investment and Waste Management

0.8

Correlation Coefficient

Gladstone Investment  Waste Management

Very poor diversification

The 3 months correlation between Gladstone and Waste is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Waste Management go up and down completely randomly.

Pair Corralation between Gladstone Investment and Waste Management

Assuming the 90 days horizon Gladstone Investment is expected to generate 4.98 times less return on investment than Waste Management. But when comparing it to its historical volatility, Gladstone Investment is 3.15 times less risky than Waste Management. It trades about 0.1 of its potential returns per unit of risk. Waste Management is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  20,507  in Waste Management on December 20, 2024 and sell it today you would earn a total of  2,229  from holding Waste Management or generate 10.87% return on investment over 90 days.

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

Gladstone Investment  vs.  Waste Management

Gladstone Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Waste Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gladstone Investment and Waste Management

The main advantage of trading using opposite Gladstone Investment and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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 Gladstone Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.