Correlation Between Heritage Crystal and Casella Waste

Can any of the company-specific risk be diversified away by investing in both Heritage Crystal and Casella Waste 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 Heritage Crystal and Casella Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Crystal Clean and Casella Waste Systems, you can compare the effects of market volatilities on Heritage Crystal and Casella Waste 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 Heritage Crystal with a short position of Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Crystal and Casella Waste.

Diversification Opportunities for Heritage Crystal and Casella Waste

0.69

Correlation Coefficient

Heritage Crystal  Casella Waste

Poor diversification

The 3 months correlation between Heritage and Casella is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Crystal Clean and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems and Heritage Crystal 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 Heritage Crystal Clean are associated (or correlated) with Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of Heritage Crystal i.e., Heritage Crystal and Casella Waste go up and down completely randomly.

Pair Corralation between Heritage Crystal and Casella Waste

If you would invest  10,840  in Casella Waste Systems on September 14, 2024 and sell it today you would earn a total of  171.00  from holding Casella Waste Systems or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Heritage Crystal Clean  vs.  Casella Waste Systems

Heritage Crystal Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Crystal Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Heritage Crystal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Casella Waste Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Casella Waste is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heritage Crystal and Casella Waste

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

The idea behind Heritage Crystal Clean and Casella Waste Systems 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.