Correlation Between Waste Connections and Dye Durham

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

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

Diversification Opportunities for Waste Connections and Dye Durham

-0.88

Correlation Coefficient

Waste Connections  Dye Durham

Pay attention - limited upside

The 3 months correlation between Waste and Dye is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Dye Durham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dye Durham and Waste Connections 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 Connections are associated (or correlated) with Dye Durham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dye Durham has no effect on the direction of Waste Connections i.e., Waste Connections and Dye Durham go up and down completely randomly.

Pair Corralation between Waste Connections and Dye Durham

Assuming the 90 days trading horizon Waste Connections is expected to generate 0.25 times more return on investment than Dye Durham. However, Waste Connections is 3.97 times less risky than Dye Durham. It trades about 0.18 of its potential returns per unit of risk. Dye Durham is currently generating about -0.13 per unit of risk. If you would invest  24,586  in Waste Connections on December 28, 2024 and sell it today you would earn a total of  3,013  from holding Waste Connections or generate 12.25% return on investment over 90 days.

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

Waste Connections  vs.  Dye Durham

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dye Durham

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dye Durham has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Waste Connections and Dye Durham

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

The idea behind Waste Connections and Dye Durham 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.