Correlation Between Waste Connections and Northstar Clean

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

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

Diversification Opportunities for Waste Connections and Northstar Clean

-0.39

Correlation Coefficient

Waste Connections  Northstar Clean

Very good diversification

The 3 months correlation between Waste and Northstar is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Waste Connections i.e., Waste Connections and Northstar Clean go up and down completely randomly.

Pair Corralation between Waste Connections and Northstar Clean

Considering the 90-day investment horizon Waste Connections is expected to generate 0.26 times more return on investment than Northstar Clean. However, Waste Connections is 3.85 times less risky than Northstar Clean. It trades about 0.18 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.02 per unit of risk. If you would invest  17,077  in Waste Connections on December 21, 2024 and sell it today you would earn a total of  1,909  from holding Waste Connections or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Waste Connections  vs.  Northstar Clean Technologies

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 inconsistent fundamental indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Northstar Clean Tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Northstar Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Waste Connections and Northstar Clean

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

The idea behind Waste Connections and Northstar Clean Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.