Correlation Between Casella Waste and Waste Connections
Can any of the company-specific risk be diversified away by investing in both Casella Waste 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 Casella Waste and Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casella Waste Systems and Waste Connections, you can compare the effects of market volatilities on Casella Waste 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 Casella Waste with a short position of Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and Waste Connections.
Diversification Opportunities for Casella Waste and Waste Connections
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Casella and Waste is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections and Casella Waste 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 Casella Waste Systems 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 Casella Waste i.e., Casella Waste and Waste Connections go up and down completely randomly.
Pair Corralation between Casella Waste and Waste Connections
Given the investment horizon of 90 days Casella Waste Systems is expected to generate 2.56 times more return on investment than Waste Connections. However, Casella Waste is 2.56 times more volatile than Waste Connections. It trades about -0.03 of its potential returns per unit of risk. Waste Connections is currently generating about -0.23 per unit of risk. If you would invest 9,639 in Casella Waste Systems on January 25, 2024 and sell it today you would lose (96.00) from holding Casella Waste Systems or give up 1.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Casella Waste Systems vs. Waste Connections
Performance |
Timeline |
Casella Waste Systems |
Waste Connections |
Casella Waste and Waste Connections Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Casella Waste and Waste Connections
The main advantage of trading using opposite Casella Waste and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casella Waste 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.Casella Waste vs. Maximus | Casella Waste vs. CBIZ Inc | Casella Waste vs. First Advantage Corp | Casella Waste vs. Cass Information Systems |
Waste Connections vs. Maximus | Waste Connections vs. CBIZ Inc | Waste Connections vs. First Advantage Corp | Waste Connections vs. Cass Information Systems |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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