Correlation Between Waste Connections and WSP Global

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

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

Diversification Opportunities for Waste Connections and WSP Global

-0.6

Correlation Coefficient

Waste Connections  WSP Global

Excellent diversification

The 3 months correlation between Waste and WSP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global and Waste Connections 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 Connections are associated (or correlated) with WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Waste Connections i.e., Waste Connections and WSP Global go up and down completely randomly.

Pair Corralation between Waste Connections and WSP Global

Assuming the 90 days trading horizon Waste Connections is expected to under-perform the WSP Global. In addition to that, Waste Connections is 1.04 times more volatile than WSP Global. It trades about -0.1 of its total potential returns per unit of risk. WSP Global is currently generating about 0.25 per unit of volatility. If you would invest  24,229  in WSP Global on April 25, 2025 and sell it today you would earn a total of  4,333  from holding WSP Global or generate 17.88% return on investment over 90 days.

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

Waste Connections  vs.  WSP Global

Waste Connections

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waste Connections has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

WSP Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WSP Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Connections and WSP Global

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

The idea behind Waste Connections and WSP Global 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.