Correlation Between Gfl Environmental and Energy

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

Diversification Opportunities for Gfl Environmental and Energy

0.41

Correlation Coefficient

Gfl Environmental  Energy

Very weak diversification

The 3 months correlation between Gfl and Energy is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Energy and Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Environmental 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Environmental has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Energy go up and down completely randomly.

Pair Corralation between Gfl Environmental and Energy

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to under-perform the Energy. But the stock apears to be less risky and, when comparing its historical volatility, Gfl Environmental Holdings is 5.07 times less risky than Energy. The stock trades about -0.28 of its potential returns per unit of risk. The Energy and Environmental is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Energy and Environmental on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Energy and Environmental or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Gfl Environmental Holdings  vs.  Energy and Environmental

Gfl Environmental

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 5 (%) 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.

Energy and Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy and Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gfl Environmental and Energy

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

The idea behind Gfl Environmental Holdings and Energy and Environmental 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.