Correlation Between Waste Connections and Secure Energy
Can any of the company-specific risk be diversified away by investing in both Waste Connections and Secure Energy 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 Connections and Secure Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Connections and Secure Energy Services, you can compare the effects of market volatilities on Waste Connections and Secure Energy 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 Connections with a short position of Secure Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Connections and Secure Energy.
Diversification Opportunities for Waste Connections and Secure Energy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and Secure is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Secure Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Energy Services and Waste Connections 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 Connections are associated (or correlated) with Secure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Energy Services has no effect on the direction of Waste Connections i.e., Waste Connections and Secure Energy go up and down completely randomly.
Pair Corralation between Waste Connections and Secure Energy
Assuming the 90 days trading horizon Waste Connections is expected to generate 1.02 times less return on investment than Secure Energy. But when comparing it to its historical volatility, Waste Connections is 1.68 times less risky than Secure Energy. It trades about 0.17 of its potential returns per unit of risk. Secure Energy Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,123 in Secure Energy Services on April 7, 2024 and sell it today you would earn a total of 70.00 from holding Secure Energy Services or generate 6.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Waste Connections vs. Secure Energy Services
Performance |
Timeline |
Waste Connections |
Secure Energy Services |
Waste Connections and Secure Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Waste Connections and Secure Energy
The main advantage of trading using opposite Waste Connections and Secure Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections position performs unexpectedly, Secure Energy 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 Secure Energy will offset losses from the drop in Secure Energy's long position.Waste Connections vs. Brompton European Dividend | Waste Connections vs. Solar Alliance Energy | Waste Connections vs. BMO Ultra Short Term | Waste Connections vs. Invesco SP 500 |
Secure Energy vs. Brompton European Dividend | Secure Energy vs. Solar Alliance Energy | Secure Energy vs. BMO Ultra Short Term | Secure Energy vs. Invesco SP 500 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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