Correlation Between Gfl Environmental and Republic Services

Can any of the company-specific risk be diversified away by investing in both Gfl Environmental and Republic Services 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 Environmental and Republic Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gfl Environmental and Republic Services

-0.09

Correlation Coefficient

Gfl Environmental  Republic Services

Good diversification

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

Pair Corralation between Gfl Environmental and Republic Services

Considering the 90-day investment horizon Gfl Environmental Holdings is expected to under-perform the Republic Services. In addition to that, Gfl Environmental is 2.11 times more volatile than Republic Services. It trades about -0.02 of its total potential returns per unit of risk. Republic Services is currently generating about 0.17 per unit of volatility. If you would invest  14,016  in Republic Services on January 25, 2024 and sell it today you would earn a total of  5,045  from holding Republic Services or generate 35.99% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  Republic Services

Gfl Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gfl Environmental Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Gfl Environmental is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Republic Services

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Services are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Republic Services may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Gfl Environmental and Republic Services

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

The idea behind Gfl Environmental Holdings and Republic Services 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.