Correlation Between Gfl Environmental and Brinks

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

Diversification Opportunities for Gfl Environmental and Brinks

-0.65

Correlation Coefficient

Gfl Environmental  Brinks

Excellent diversification

The 3 months correlation between Gfl and Brinks is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Brinks go up and down completely randomly.

Pair Corralation between Gfl Environmental and Brinks

Considering the 90-day investment horizon Gfl Environmental is expected to generate 1.11 times less return on investment than Brinks. In addition to that, Gfl Environmental is 1.08 times more volatile than Brinks Company. It trades about 0.04 of its total potential returns per unit of risk. Brinks Company is currently generating about 0.05 per unit of volatility. If you would invest  7,937  in Brinks Company on October 22, 2024 and sell it today you would earn a total of  1,329  from holding Brinks Company or generate 16.74% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  Brinks Company

Gfl Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Gfl Environmental is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Brinks Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Company 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Gfl Environmental and Brinks

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

The idea behind Gfl Environmental Holdings and Brinks Company 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.