Correlation Between Gfl Environmental and Alignment Healthcare

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

Diversification Opportunities for Gfl Environmental and Alignment Healthcare

0.24

Correlation Coefficient

Gfl Environmental  Alignment Healthcare

Modest diversification

The 3 months correlation between Gfl and Alignment is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC 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 Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Alignment Healthcare go up and down completely randomly.

Pair Corralation between Gfl Environmental and Alignment Healthcare

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.37 times more return on investment than Alignment Healthcare. However, Gfl Environmental Holdings is 2.67 times less risky than Alignment Healthcare. It trades about 0.03 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about -0.07 per unit of risk. If you would invest  4,425  in Gfl Environmental Holdings on October 11, 2024 and sell it today you would earn a total of  50.00  from holding Gfl Environmental Holdings or generate 1.13% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  Alignment Healthcare LLC

Gfl Environmental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Gfl Environmental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alignment Healthcare LLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, Alignment Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gfl Environmental and Alignment Healthcare

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

The idea behind Gfl Environmental Holdings and Alignment Healthcare LLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.