Correlation Between BlueScope Steel and Gfl Environmental
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel 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 BlueScope Steel and Gfl Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and Gfl Environmental Holdings, you can compare the effects of market volatilities on BlueScope Steel 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 BlueScope Steel with a short position of Gfl Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Gfl Environmental.
Diversification Opportunities for BlueScope Steel and Gfl Environmental
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlueScope and Gfl is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and BlueScope Steel 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 BlueScope Steel Limited 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 BlueScope Steel i.e., BlueScope Steel and Gfl Environmental go up and down completely randomly.
Pair Corralation between BlueScope Steel and Gfl Environmental
Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 0.67 times more return on investment than Gfl Environmental. However, BlueScope Steel Limited is 1.5 times less risky than Gfl Environmental. It trades about -0.08 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about -0.12 per unit of risk. If you would invest 1,502 in BlueScope Steel Limited on February 28, 2024 and sell it today you would lose (90.00) from holding BlueScope Steel Limited or give up 5.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BlueScope Steel Limited vs. Gfl Environmental Holdings
Performance |
Timeline |
BlueScope Steel |
Gfl Environmental |
BlueScope Steel and Gfl Environmental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BlueScope Steel and Gfl Environmental
The main advantage of trading using opposite BlueScope Steel and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel 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.BlueScope Steel vs. Nucor Corp | BlueScope Steel vs. United States Steel | BlueScope Steel vs. Reliance Steel Aluminum | BlueScope Steel vs. ArcelorMittal SA ADR |
Gfl Environmental vs. Republic Services | Gfl Environmental vs. Casella Waste Systems | Gfl Environmental vs. Montrose Environmental Grp |
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.
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