Correlation Between Cleanaway Waste and Republic Services

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

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

Diversification Opportunities for Cleanaway Waste and Republic Services

-0.23

Correlation Coefficient

Cleanaway Waste  Republic Services

Very good diversification

The 3 months correlation between Cleanaway and Republic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Republic Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Services and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with Republic Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Services has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and Republic Services go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Republic Services

Assuming the 90 days horizon Cleanaway Waste is expected to generate 3.35 times less return on investment than Republic Services. In addition to that, Cleanaway Waste is 7.62 times more volatile than Republic Services. It trades about 0.01 of its total potential returns per unit of risk. Republic Services is currently generating about 0.29 per unit of volatility. If you would invest  20,061  in Republic Services on December 30, 2024 and sell it today you would earn a total of  3,793  from holding Republic Services or generate 18.91% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Republic Services

Cleanaway Waste Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Cleanaway Waste is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Republic Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Services are ranked lower than 22 (%) 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.

Pair Trading with Cleanaway Waste and Republic Services

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

The idea behind Cleanaway Waste Management and Republic Services 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.