Correlation Between GFL ENVIRONM and Perma-Fix Environmental

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

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

Diversification Opportunities for GFL ENVIRONM and Perma-Fix Environmental

0.4

Correlation Coefficient

GFL ENVIRONM  Perma-Fix Environmental

Very weak diversification

The 3 months correlation between GFL and Perma-Fix is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental and GFL ENVIRONM 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 ENVIRONM are associated (or correlated) with Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between GFL ENVIRONM and Perma-Fix Environmental

Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.41 times more return on investment than Perma-Fix Environmental. However, GFL ENVIRONM is 2.43 times less risky than Perma-Fix Environmental. It trades about 0.2 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.06 per unit of risk. If you would invest  3,519  in GFL ENVIRONM on September 18, 2024 and sell it today you would earn a total of  801.00  from holding GFL ENVIRONM or generate 22.76% return on investment over 90 days.

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

GFL ENVIRONM  vs.  Perma Fix Environmental Servic

GFL ENVIRONM

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.

Perma Fix Environmental

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with GFL ENVIRONM and Perma-Fix Environmental

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

The idea behind GFL ENVIRONM and Perma Fix Environmental 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.