Correlation Between GFL ENVIRONM and Realord Group

Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Realord Group 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 GFL ENVIRONM and Realord Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GFL ENVIRONM and Realord Group Holdings, you can compare the effects of market volatilities on GFL ENVIRONM and Realord Group 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 GFL ENVIRONM with a short position of Realord Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Realord Group.

Diversification Opportunities for GFL ENVIRONM and Realord Group

0.01

Correlation Coefficient

GFL ENVIRONM  Realord Group

Significant diversification

The 3 months correlation between GFL and Realord is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Realord Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realord Group Holdings and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with Realord Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realord Group Holdings has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Realord Group go up and down completely randomly.

Pair Corralation between GFL ENVIRONM and Realord Group

Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the Realord Group. In addition to that, GFL ENVIRONM is 1.61 times more volatile than Realord Group Holdings. It trades about -0.16 of its total potential returns per unit of risk. Realord Group Holdings is currently generating about 0.09 per unit of volatility. If you would invest  62.00  in Realord Group Holdings on January 30, 2024 and sell it today you would earn a total of  1.00  from holding Realord Group Holdings or generate 1.61% return on investment over 90 days.

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

GFL ENVIRONM  vs.  Realord Group Holdings

GFL ENVIRONM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GFL ENVIRONM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GFL ENVIRONM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Realord Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Realord Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Realord Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GFL ENVIRONM and Realord Group

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

The idea behind GFL ENVIRONM and Realord Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.