Correlation Between Waste Management and Gfl Environmental

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

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

Diversification Opportunities for Waste Management and Gfl Environmental

0.59

Correlation Coefficient

Waste Management  Gfl Environmental

Very weak diversification

The 3 months correlation between Waste and Gfl is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental 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 Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Waste Management i.e., Waste Management and Gfl Environmental go up and down completely randomly.

Pair Corralation between Waste Management and Gfl Environmental

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.73 times more return on investment than Gfl Environmental. However, Waste Management is 1.38 times less risky than Gfl Environmental. It trades about 0.16 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.09 per unit of risk. If you would invest  20,426  in Waste Management on December 26, 2024 and sell it today you would earn a total of  2,281  from holding Waste Management or generate 11.17% return on investment over 90 days.

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

Waste Management  vs.  Gfl Environmental Holdings

Waste Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gfl Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Gfl Environmental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Waste Management and Gfl Environmental

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

The idea behind Waste Management and Gfl Environmental 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.