Correlation Between Waste Management and Garb Oil

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

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

Diversification Opportunities for Waste Management and Garb Oil

0.0

Correlation Coefficient

Waste Management  Garb Oil

Pay attention - limited upside

The 3 months correlation between Waste and Garb is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Garb Oil Pwr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garb Oil Pwr 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 Garb Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garb Oil Pwr has no effect on the direction of Waste Management i.e., Waste Management and Garb Oil go up and down completely randomly.

Pair Corralation between Waste Management and Garb Oil

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.22 times more return on investment than Garb Oil. However, Waste Management is 4.61 times less risky than Garb Oil. It trades about 0.06 of its potential returns per unit of risk. Garb Oil Pwr is currently generating about -0.05 per unit of risk. If you would invest  15,923  in Waste Management on October 3, 2024 and sell it today you would earn a total of  4,304  from holding Waste Management or generate 27.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Waste Management  vs.  Garb Oil Pwr

Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Garb Oil Pwr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garb Oil Pwr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Garb Oil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Waste Management and Garb Oil

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

The idea behind Waste Management and Garb Oil Pwr 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.