Correlation Between Waste Management and Lucas GC

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

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

Diversification Opportunities for Waste Management and Lucas GC

-0.12

Correlation Coefficient

Waste Management  Lucas GC

Good diversification

The 3 months correlation between Waste and Lucas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Lucas GC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucas GC Limited 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 Lucas GC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucas GC Limited has no effect on the direction of Waste Management i.e., Waste Management and Lucas GC go up and down completely randomly.

Pair Corralation between Waste Management and Lucas GC

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.17 times more return on investment than Lucas GC. However, Waste Management is 5.92 times less risky than Lucas GC. It trades about 0.18 of its potential returns per unit of risk. Lucas GC Limited is currently generating about 0.02 per unit of risk. If you would invest  20,327  in Waste Management on December 27, 2024 and sell it today you would earn a total of  2,566  from holding Waste Management or generate 12.62% return on investment over 90 days.

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

Waste Management  vs.  Lucas GC Limited

Waste Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Waste Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Lucas GC Limited

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lucas GC Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Lucas GC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Waste Management and Lucas GC

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

The idea behind Waste Management and Lucas GC Limited 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 Stocks Directory module to find actively traded stocks across global markets.