Correlation Between Waste Management and GAMCO Global

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

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

Diversification Opportunities for Waste Management and GAMCO Global

-0.61

Correlation Coefficient

Waste Management  GAMCO Global

Excellent diversification

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

Pair Corralation between Waste Management and GAMCO Global

Allowing for the 90-day total investment horizon Waste Management is expected to generate 1.09 times more return on investment than GAMCO Global. However, Waste Management is 1.09 times more volatile than GAMCO Global Gold. It trades about 0.13 of its potential returns per unit of risk. GAMCO Global Gold is currently generating about 0.01 per unit of risk. If you would invest  20,864  in Waste Management on August 31, 2024 and sell it today you would earn a total of  1,982  from holding Waste Management or generate 9.5% return on investment over 90 days.

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

Waste Management  vs.  GAMCO Global Gold

Waste Management

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in December 2024.

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Waste Management and GAMCO Global

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

The idea behind Waste Management and GAMCO Global Gold 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.