Correlation Between Waste Management and GEE

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

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

Diversification Opportunities for Waste Management and GEE

-0.8

Correlation Coefficient

Waste Management  GEE

Pay attention - limited upside

The 3 months correlation between Waste and GEE is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and GEE Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEE Group 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 GEE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEE Group has no effect on the direction of Waste Management i.e., Waste Management and GEE go up and down completely randomly.

Pair Corralation between Waste Management and GEE

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.45 times more return on investment than GEE. However, Waste Management is 2.2 times less risky than GEE. It trades about 0.07 of its potential returns per unit of risk. GEE Group is currently generating about -0.23 per unit of risk. If you would invest  20,670  in Waste Management on February 6, 2024 and sell it today you would earn a total of  225.00  from holding Waste Management or generate 1.09% return on investment over 90 days.

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

Waste Management  vs.  GEE Group

Waste Management

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in June 2024.

GEE Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEE Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Waste Management and GEE

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

The idea behind Waste Management and GEE Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.