Correlation Between Waste Management and International Game
Can any of the company-specific risk be diversified away by investing in both Waste Management and International Game 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 Waste Management and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and International Game Technology, you can compare the effects of market volatilities on Waste Management and International Game 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 Waste Management with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and International Game.
Diversification Opportunities for Waste Management and International Game
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Waste and International is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Waste Management 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 Waste Management are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Waste Management i.e., Waste Management and International Game go up and down completely randomly.
Pair Corralation between Waste Management and International Game
Assuming the 90 days trading horizon Waste Management is expected to generate 0.66 times more return on investment than International Game. However, Waste Management is 1.51 times less risky than International Game. It trades about 0.09 of its potential returns per unit of risk. International Game Technology is currently generating about -0.09 per unit of risk. If you would invest 20,487 in Waste Management on November 18, 2024 and sell it today you would earn a total of 1,218 from holding Waste Management or generate 5.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Waste Management vs. International Game Technology
Performance |
Timeline |
Waste Management |
International Game |
Waste Management and International Game Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Waste Management and International Game
The main advantage of trading using opposite Waste Management and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, International Game 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 International Game will offset losses from the drop in International Game's long position.Waste Management vs. Sterling Construction | ||
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Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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