Correlation Between Gfl Environmental and Mountain Crest

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

Diversification Opportunities for Gfl Environmental and Mountain Crest

0.77

Correlation Coefficient

Gfl Environmental  Mountain Crest

Poor diversification

The 3 months correlation between Gfl and Mountain is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Mountain Crest Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Crest Acqui 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 Mountain Crest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Crest Acqui has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Mountain Crest go up and down completely randomly.

Pair Corralation between Gfl Environmental and Mountain Crest

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.06 times more return on investment than Mountain Crest. However, Gfl Environmental Holdings is 15.44 times less risky than Mountain Crest. It trades about 0.04 of its potential returns per unit of risk. Mountain Crest Acquisition is currently generating about -0.3 per unit of risk. If you would invest  3,105  in Gfl Environmental Holdings on October 23, 2024 and sell it today you would earn a total of  1,054  from holding Gfl Environmental Holdings or generate 33.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.45%
Values	Daily Returns

Gfl Environmental Holdings  vs.  Mountain Crest Acquisition

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.

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Mountain Crest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gfl Environmental and Mountain Crest

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

The idea behind Gfl Environmental Holdings and Mountain Crest Acquisition 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.