Correlation Between Waste Management and Sancus Lending

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

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

Diversification Opportunities for Waste Management and Sancus Lending

-0.55

Correlation Coefficient

Waste Management  Sancus Lending

Excellent diversification

The 3 months correlation between Waste and Sancus is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Sancus Lending Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sancus Lending 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 Sancus Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sancus Lending Group has no effect on the direction of Waste Management i.e., Waste Management and Sancus Lending go up and down completely randomly.

Pair Corralation between Waste Management and Sancus Lending

Assuming the 90 days trading horizon Waste Management is expected to generate 7.51 times less return on investment than Sancus Lending. But when comparing it to its historical volatility, Waste Management is 6.34 times less risky than Sancus Lending. It trades about 0.05 of its potential returns per unit of risk. Sancus Lending Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Sancus Lending Group on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Sancus Lending Group or generate 11.11% return on investment over 90 days.

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

Waste Management  vs.  Sancus Lending Group

Waste Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sancus Lending Group

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Waste Management and Sancus Lending

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

The idea behind Waste Management and Sancus Lending 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.