Correlation Between Republic Services and Gfl Environmental

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

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

Diversification Opportunities for Republic Services and Gfl Environmental

0.61

Correlation Coefficient

Republic Services  Gfl Environmental

Poor diversification

The 3 months correlation between Republic and Gfl is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Republic Services and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Republic Services 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 Republic Services are associated (or correlated) with Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Republic Services i.e., Republic Services and Gfl Environmental go up and down completely randomly.

Pair Corralation between Republic Services and Gfl Environmental

Considering the 90-day investment horizon Republic Services is expected to generate 0.62 times more return on investment than Gfl Environmental. However, Republic Services is 1.6 times less risky than Gfl Environmental. It trades about 0.3 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.1 per unit of risk. If you would invest  20,061  in Republic Services on December 28, 2024 and sell it today you would earn a total of  3,916  from holding Republic Services or generate 19.52% return on investment over 90 days.

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

Republic Services  vs.  Gfl Environmental Holdings

Republic Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Services are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Republic Services reported solid returns over the last few months and may actually be approaching a breakup point.

Gfl Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 7 (%) 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.

Pair Trading with Republic Services and Gfl Environmental

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

The idea behind Republic Services and Gfl Environmental Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.