Correlation Between ICF International and Waste Connections

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

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

Diversification Opportunities for ICF International and Waste Connections

-0.67

Correlation Coefficient

ICF International  Waste Connections

Excellent diversification

The 3 months correlation between ICF and Waste is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ICF International and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and ICF International 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 ICF International are associated (or correlated) with Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of ICF International i.e., ICF International and Waste Connections go up and down completely randomly.

Pair Corralation between ICF International and Waste Connections

Given the investment horizon of 90 days ICF International is expected to under-perform the Waste Connections. In addition to that, ICF International is 3.4 times more volatile than Waste Connections. It trades about -0.15 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.19 per unit of volatility. If you would invest  17,153  in Waste Connections on December 26, 2024 and sell it today you would earn a total of  2,021  from holding Waste Connections or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ICF International  vs.  Waste Connections

ICF International

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICF International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ICF International and Waste Connections

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

The idea behind ICF International and Waste Connections 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.