Correlation Between Waste Connections and Excellon Resources

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

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

Diversification Opportunities for Waste Connections and Excellon Resources

0.49

Correlation Coefficient

Waste Connections  Excellon Resources

Very weak diversification

The 3 months correlation between Waste and Excellon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon Resources 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 Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of Waste Connections i.e., Waste Connections and Excellon Resources go up and down completely randomly.

Pair Corralation between Waste Connections and Excellon Resources

Assuming the 90 days trading horizon Waste Connections is expected to generate 7.05 times less return on investment than Excellon Resources. But when comparing it to its historical volatility, Waste Connections is 8.1 times less risky than Excellon Resources. It trades about 0.15 of its potential returns per unit of risk. Excellon Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Excellon Resources on December 24, 2024 and sell it today you would earn a total of  6.00  from holding Excellon Resources or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Waste Connections  vs.  Excellon Resources

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 11 (%) 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.

Excellon Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Connections and Excellon Resources

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

The idea behind Waste Connections and Excellon Resources 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.