Correlation Between Supremex and Gfl Environmental

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

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

Diversification Opportunities for Supremex and Gfl Environmental

0.3

Correlation Coefficient

Supremex  Gfl Environmental

Weak diversification

The 3 months correlation between Supremex and Gfl is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Supremex 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 Supremex 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 Supremex i.e., Supremex and Gfl Environmental go up and down completely randomly.

Pair Corralation between Supremex and Gfl Environmental

Assuming the 90 days trading horizon Supremex is expected to generate 1.99 times more return on investment than Gfl Environmental. However, Supremex is 1.99 times more volatile than Gfl Environmental Holdings. It trades about 0.02 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about -0.05 per unit of risk. If you would invest  398.00  in Supremex on November 29, 2024 and sell it today you would earn a total of  7.00  from holding Supremex or generate 1.76% return on investment over 90 days.

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

Supremex  vs.  Gfl Environmental Holdings

Supremex

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Supremex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Supremex is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gfl Environmental

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Supremex and Gfl Environmental

The main advantage of trading using opposite Supremex and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex 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 Supremex 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.