Correlation Between Gfl Environmental and Pure Cycle

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

Diversification Opportunities for Gfl Environmental and Pure Cycle

0.91

Correlation Coefficient

Gfl Environmental  Pure Cycle

Almost no diversification

The 3 months correlation between Gfl and Pure is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Pure Cycle go up and down completely randomly.

Pair Corralation between Gfl Environmental and Pure Cycle

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.6 times more return on investment than Pure Cycle. However, Gfl Environmental Holdings is 1.67 times less risky than Pure Cycle. It trades about -0.33 of its potential returns per unit of risk. Pure Cycle is currently generating about -0.43 per unit of risk. If you would invest  4,471  in Gfl Environmental Holdings on October 25, 2024 and sell it today you would lose (277.00) from holding Gfl Environmental Holdings or give up 6.2% of portfolio value over 90 days.

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

Gfl Environmental Holdings  vs.  Pure Cycle

Gfl Environmental

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 4 (%) 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.

Pure Cycle

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Pure Cycle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gfl Environmental and Pure Cycle

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

The idea behind Gfl Environmental Holdings and Pure Cycle 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.