Correlation Between Gfl Environmental and Diamond Estates

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

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

Diversification Opportunities for Gfl Environmental and Diamond Estates

-0.96

Correlation Coefficient

Gfl Environmental  Diamond Estates

Pay attention - limited upside

The 3 months correlation between Gfl and Diamond is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines and Gfl Environmental 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 Gfl Environmental Holdings are associated (or correlated) with Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Diamond Estates go up and down completely randomly.

Pair Corralation between Gfl Environmental and Diamond Estates

Assuming the 90 days trading horizon Gfl Environmental Holdings is expected to under-perform the Diamond Estates. But the stock apears to be less risky and, when comparing its historical volatility, Gfl Environmental Holdings is 4.47 times less risky than Diamond Estates. The stock trades about -0.09 of its potential returns per unit of risk. The Diamond Estates Wines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Diamond Estates Wines on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Diamond Estates Wines or generate 4.76% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  Diamond Estates Wines

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.

Diamond Estates Wines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gfl Environmental and Diamond Estates

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

The idea behind Gfl Environmental Holdings and Diamond Estates Wines 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.