Correlation Between 031162DG2 and Waste Management

Can any of the company-specific risk be diversified away by investing in both 031162DG2 and Waste Management 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 031162DG2 and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMGN 44 22 FEB 62 and Waste Management, you can compare the effects of market volatilities on 031162DG2 and Waste Management 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 031162DG2 with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of 031162DG2 and Waste Management.

Diversification Opportunities for 031162DG2 and Waste Management

-0.72

Correlation Coefficient

031162DG2  Waste Management

Pay attention - limited upside

The 3 months correlation between 031162DG2 and Waste is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AMGN 44 22 FEB 62 and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and 031162DG2 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 AMGN 44 22 FEB 62 are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of 031162DG2 i.e., 031162DG2 and Waste Management go up and down completely randomly.

Pair Corralation between 031162DG2 and Waste Management

Assuming the 90 days trading horizon AMGN 44 22 FEB 62 is expected to under-perform the Waste Management. But the bond apears to be less risky and, when comparing its historical volatility, AMGN 44 22 FEB 62 is 1.24 times less risky than Waste Management. The bond trades about -0.08 of its potential returns per unit of risk. The Waste Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20,735  in Waste Management on September 13, 2024 and sell it today you would earn a total of  717.00  from holding Waste Management or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

AMGN 44 22 FEB 62  vs.  Waste Management

AMGN 44 22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGN 44 22 FEB 62 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 031162DG2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Waste Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Waste Management is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 031162DG2 and Waste Management

The main advantage of trading using opposite 031162DG2 and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 031162DG2 position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.

The idea behind AMGN 44 22 FEB 62 and Waste Management 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.