Correlation Between Waste Management and Greenshift Corp

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

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

Diversification Opportunities for Waste Management and Greenshift Corp

-0.3

Correlation Coefficient

Waste Management  Greenshift Corp

Very good diversification

The 3 months correlation between Waste and Greenshift is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Greenshift Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenshift Corp 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 Greenshift Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenshift Corp has no effect on the direction of Waste Management i.e., Waste Management and Greenshift Corp go up and down completely randomly.

Pair Corralation between Waste Management and Greenshift Corp

Allowing for the 90-day total investment horizon Waste Management is expected to under-perform the Greenshift Corp. But the stock apears to be less risky and, when comparing its historical volatility, Waste Management is 9.49 times less risky than Greenshift Corp. The stock trades about -0.07 of its potential returns per unit of risk. The Greenshift Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4.39  in Greenshift Corp on January 25, 2024 and sell it today you would earn a total of  2.00  from holding Greenshift Corp or generate 45.56% return on investment over 90 days.

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

Waste Management  vs.  Greenshift Corp

Waste Management

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Waste Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Greenshift Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greenshift Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Greenshift Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Management and Greenshift Corp

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

The idea behind Waste Management and Greenshift Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.