Correlation Between Waste Management and ChargePoint Holdings

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

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

Diversification Opportunities for Waste Management and ChargePoint Holdings

0.13

Correlation Coefficient

Waste Management  ChargePoint Holdings

Average diversification

The 3 months correlation between Waste and ChargePoint is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and ChargePoint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePoint Holdings 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 ChargePoint Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePoint Holdings has no effect on the direction of Waste Management i.e., Waste Management and ChargePoint Holdings go up and down completely randomly.

Pair Corralation between Waste Management and ChargePoint Holdings

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.17 times more return on investment than ChargePoint Holdings. However, Waste Management is 5.74 times less risky than ChargePoint Holdings. It trades about 0.32 of its potential returns per unit of risk. ChargePoint Holdings is currently generating about -0.05 per unit of risk. If you would invest  20,380  in Waste Management on October 22, 2024 and sell it today you would earn a total of  791.00  from holding Waste Management or generate 3.88% 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.  ChargePoint Holdings

Waste Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Waste Management is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Waste Management and ChargePoint Holdings

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

The idea behind Waste Management and ChargePoint Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..