Correlation Between Waste Management and Duckhorn Portfolio

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

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

Diversification Opportunities for Waste Management and Duckhorn Portfolio

0.1

Correlation Coefficient

Waste Management  Duckhorn Portfolio

Average diversification

The 3 months correlation between Waste and Duckhorn is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Duckhorn Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duckhorn Portfolio 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 Duckhorn Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duckhorn Portfolio has no effect on the direction of Waste Management i.e., Waste Management and Duckhorn Portfolio go up and down completely randomly.

Pair Corralation between Waste Management and Duckhorn Portfolio

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.33 times more return on investment than Duckhorn Portfolio. However, Waste Management is 3.04 times less risky than Duckhorn Portfolio. It trades about -0.11 of its potential returns per unit of risk. Duckhorn Portfolio is currently generating about -0.29 per unit of risk. If you would invest  21,111  in Waste Management on February 2, 2024 and sell it today you would lose (435.00) from holding Waste Management or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Waste Management  vs.  Duckhorn Portfolio

Waste Management

Risk-Adjusted Performance

12 of 100

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 June 2024.

Duckhorn Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duckhorn Portfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Waste Management and Duckhorn Portfolio

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

The idea behind Waste Management and Duckhorn Portfolio 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.