Correlation Between Casella Waste and Clean Harbors

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

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

Diversification Opportunities for Casella Waste and Clean Harbors

0.1

Correlation Coefficient

Casella Waste  Clean Harbors

Average diversification

The 3 months correlation between Casella and Clean is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Clean Harbors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Harbors and Casella Waste 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 Casella Waste Systems are associated (or correlated) with Clean Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Harbors has no effect on the direction of Casella Waste i.e., Casella Waste and Clean Harbors go up and down completely randomly.

Pair Corralation between Casella Waste and Clean Harbors

Given the investment horizon of 90 days Casella Waste Systems is expected to generate 0.94 times more return on investment than Clean Harbors. However, Casella Waste Systems is 1.07 times less risky than Clean Harbors. It trades about 0.06 of its potential returns per unit of risk. Clean Harbors is currently generating about -0.03 per unit of risk. If you would invest  10,894  in Casella Waste Systems on February 3, 2025 and sell it today you would earn a total of  781.00  from holding Casella Waste Systems or generate 7.17% return on investment over 90 days.

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

Casella Waste Systems  vs.  Clean Harbors

Casella Waste Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Casella Waste may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Clean Harbors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Harbors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Clean Harbors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Casella Waste and Clean Harbors

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

The idea behind Casella Waste Systems and Clean Harbors 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.