Correlation Between Gfl Environmental and Ramp Metals

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

By analyzing existing cross correlation between Gfl Environmental Holdings and Ramp Metals, you can compare the effects of market volatilities on Gfl Environmental and Ramp Metals 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 Environmental with a short position of Ramp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and Ramp Metals.

Diversification Opportunities for Gfl Environmental and Ramp Metals

0.61

Correlation Coefficient

Gfl Environmental  Ramp Metals

Poor diversification

The 3 months correlation between Gfl and Ramp is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Ramp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramp Metals and Gfl Environmental 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 Environmental Holdings are associated (or correlated) with Ramp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramp Metals has no effect on the direction of Gfl Environmental i.e., Gfl Environmental and Ramp Metals go up and down completely randomly.

Pair Corralation between Gfl Environmental and Ramp Metals

Assuming the 90 days trading horizon Gfl Environmental is expected to generate 1.3 times less return on investment than Ramp Metals. But when comparing it to its historical volatility, Gfl Environmental Holdings is 2.76 times less risky than Ramp Metals. It trades about 0.12 of its potential returns per unit of risk. Ramp Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Ramp Metals on August 30, 2024 and sell it today you would earn a total of  6.00  from holding Ramp Metals or generate 9.52% return on investment over 90 days.

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

Gfl Environmental Holdings  vs.  Ramp Metals

Gfl Environmental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Gfl Environmental may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ramp Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ramp Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Ramp Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gfl Environmental and Ramp Metals

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

The idea behind Gfl Environmental Holdings and Ramp Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..