Correlation Between Umicore SA and Waste Connections

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

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

Diversification Opportunities for Umicore SA and Waste Connections

-0.14

Correlation Coefficient

Umicore SA  Waste Connections

Good diversification

The 3 months correlation between Umicore and Waste is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Umicore SA and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Umicore SA 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 Umicore SA 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 Umicore SA i.e., Umicore SA and Waste Connections go up and down completely randomly.

Pair Corralation between Umicore SA and Waste Connections

Assuming the 90 days trading horizon Umicore SA is expected to under-perform the Waste Connections. In addition to that, Umicore SA is 3.01 times more volatile than Waste Connections. It trades about -0.03 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.13 per unit of volatility. If you would invest  16,353  in Waste Connections on December 30, 2024 and sell it today you would earn a total of  1,547  from holding Waste Connections or generate 9.46% return on investment over 90 days.

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

Umicore SA  vs.  Waste Connections

Umicore SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Umicore SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Waste Connections

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Umicore SA and Waste Connections

The main advantage of trading using opposite Umicore SA and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Umicore SA 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 Umicore SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.