Correlation Between Strategic Env and Waste Connections

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

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

Diversification Opportunities for Strategic Env and Waste Connections

-0.24

Correlation Coefficient

Strategic Env  Waste Connections

Very good diversification

The 3 months correlation between Strategic and Waste is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Env Egy and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Strategic Env 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 Strategic Env Egy 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 Strategic Env i.e., Strategic Env and Waste Connections go up and down completely randomly.

Pair Corralation between Strategic Env and Waste Connections

Given the investment horizon of 90 days Strategic Env Egy is expected to generate 42.94 times more return on investment than Waste Connections. However, Strategic Env is 42.94 times more volatile than Waste Connections. It trades about 0.13 of its potential returns per unit of risk. Waste Connections is currently generating about -0.01 per unit of risk. If you would invest  9.00  in Strategic Env Egy on September 17, 2024 and sell it today you would lose (2.00) from holding Strategic Env Egy or give up 22.22% of portfolio value over 90 days.

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

Strategic Env Egy  vs.  Waste Connections

Strategic Env Egy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Env Egy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Strategic Env reported solid returns over the last few months and may actually be approaching a breakup point.

Waste Connections

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Connections has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Waste Connections is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Strategic Env and Waste Connections

The main advantage of trading using opposite Strategic Env and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Env 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 Strategic Env Egy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.