Correlation Between George Weston and Waste Connections

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

By analyzing existing cross correlation between George Weston Limited and Waste Connections, you can compare the effects of market volatilities on George Weston and Waste Connections 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 George Weston with a short position of Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Weston and Waste Connections.

Diversification Opportunities for George Weston and Waste Connections

0.09

Correlation Coefficient

George Weston  Waste Connections

Significant diversification

The 3 months correlation between George and Waste is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding George Weston Limited and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and George Weston 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 George Weston Limited are associated (or correlated) with Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of George Weston i.e., George Weston and Waste Connections go up and down completely randomly.

Pair Corralation between George Weston and Waste Connections

Assuming the 90 days horizon George Weston Limited is expected to generate 1.13 times more return on investment than Waste Connections. However, George Weston is 1.13 times more volatile than Waste Connections. It trades about 0.04 of its potential returns per unit of risk. Waste Connections is currently generating about 0.04 per unit of risk. If you would invest  22,624  in George Weston Limited on December 1, 2024 and sell it today you would earn a total of  518.00  from holding George Weston Limited or generate 2.29% return on investment over 90 days.

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

George Weston Limited  vs.  Waste Connections

George Weston Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, George Weston is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Waste Connections

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Waste Connections is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with George Weston and Waste Connections

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

The idea behind George Weston Limited and Waste Connections 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.