Correlation Between Gfl Environmental and M Split

Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and M Split 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 M Split 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 M Split Corp, you can compare the effects of market volatilities on Gfl Environmental and M Split 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 M Split. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and M Split.

Diversification Opportunities for Gfl Environmental and M Split

0.75

Correlation Coefficient

Gfl Environmental  M Split

Poor diversification

The 3 months correlation between Gfl and XMF-PB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and M Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Split Corp 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 M Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Split Corp has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and M Split go up and down completely randomly.

Pair Corralation between Gfl Environmental and M Split

Assuming the 90 days trading horizon Gfl Environmental Holdings is expected to generate 2.25 times more return on investment than M Split. However, Gfl Environmental is 2.25 times more volatile than M Split Corp. It trades about 0.06 of its potential returns per unit of risk. M Split Corp is currently generating about 0.06 per unit of risk. If you would invest  4,225  in Gfl Environmental Holdings on October 13, 2024 and sell it today you would earn a total of  2,150  from holding Gfl Environmental Holdings or generate 50.89% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  M Split Corp

Gfl Environmental

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 11 (%) 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.

M Split Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in M Split Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, M Split is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gfl Environmental and M Split

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

The idea behind Gfl Environmental Holdings and M Split Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.