Correlation Between Gfl Environmental and GENERAL

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

Diversification Opportunities for Gfl Environmental and GENERAL

0.6

Correlation Coefficient

Gfl Environmental  GENERAL

Poor diversification

The 3 months correlation between Gfl and GENERAL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and GENERAL go up and down completely randomly.

Pair Corralation between Gfl Environmental and GENERAL

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 0.72 times more return on investment than GENERAL. However, Gfl Environmental Holdings is 1.38 times less risky than GENERAL. It trades about 0.07 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.1 per unit of risk. If you would invest  4,471  in Gfl Environmental Holdings on December 21, 2024 and sell it today you would earn a total of  275.00  from holding Gfl Environmental Holdings or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	40.0%
Values	Daily Returns

Gfl Environmental Holdings  vs.  GENERAL ELEC CAP

Gfl Environmental

Risk-Adjusted Performance

Modest

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 conflicting technical and fundamental indicators, Gfl Environmental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GENERAL ELEC CAP

Risk-Adjusted Performance

Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for GENERAL ELEC CAP investors.

Pair Trading with Gfl Environmental and GENERAL

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

The idea behind Gfl Environmental Holdings and GENERAL ELEC CAP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.