Correlation Between Maximus and Waste Connections

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

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

Diversification Opportunities for Maximus and Waste Connections

-0.67

Correlation Coefficient

Maximus  Waste Connections

Excellent diversification

The 3 months correlation between Maximus and Waste is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Maximus 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 Maximus 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 Maximus i.e., Maximus and Waste Connections go up and down completely randomly.

Pair Corralation between Maximus and Waste Connections

Considering the 90-day investment horizon Maximus is expected to under-perform the Waste Connections. In addition to that, Maximus is 1.85 times more volatile than Waste Connections. It trades about -0.06 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.22 per unit of volatility. If you would invest  17,088  in Waste Connections on December 28, 2024 and sell it today you would earn a total of  2,303  from holding Waste Connections or generate 13.48% return on investment over 90 days.

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

Maximus  vs.  Waste Connections

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Waste Connections displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maximus and Waste Connections

The main advantage of trading using opposite Maximus and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maximus 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 Maximus 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.