Correlation Between Clean Harbors and Tetra Tech

Can any of the company-specific risk be diversified away by investing in both Clean Harbors and Tetra Tech 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 Clean Harbors and Tetra Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Harbors and Tetra Tech, you can compare the effects of market volatilities on Clean Harbors and Tetra Tech 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 Clean Harbors with a short position of Tetra Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Harbors and Tetra Tech.

Diversification Opportunities for Clean Harbors and Tetra Tech

0.91

Correlation Coefficient

Clean Harbors  Tetra Tech

Almost no diversification

The 3 months correlation between Clean and Tetra is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors and Tetra Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetra Tech and Clean Harbors 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 Clean Harbors are associated (or correlated) with Tetra Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetra Tech has no effect on the direction of Clean Harbors i.e., Clean Harbors and Tetra Tech go up and down completely randomly.

Pair Corralation between Clean Harbors and Tetra Tech

Considering the 90-day investment horizon Clean Harbors is expected to generate 0.93 times more return on investment than Tetra Tech. However, Clean Harbors is 1.08 times less risky than Tetra Tech. It trades about 0.05 of its potential returns per unit of risk. Tetra Tech is currently generating about 0.02 per unit of risk. If you would invest  16,443  in Clean Harbors on March 21, 2025 and sell it today you would earn a total of  6,191  from holding Clean Harbors or generate 37.65% return on investment over 90 days.

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

Clean Harbors  vs.  Tetra Tech

Clean Harbors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Harbors are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Clean Harbors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tetra Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tetra Tech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish technical and fundamental indicators, Tetra Tech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Harbors and Tetra Tech

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

The idea behind Clean Harbors and Tetra Tech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..