Correlation Between Waste Management and Quad Graphics

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

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

Diversification Opportunities for Waste Management and Quad Graphics

-0.01

Correlation Coefficient

Waste Management  Quad Graphics

Good diversification

The 3 months correlation between Waste and Quad is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Quad Graphics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quad Graphics 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 Quad Graphics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quad Graphics has no effect on the direction of Waste Management i.e., Waste Management and Quad Graphics go up and down completely randomly.

Pair Corralation between Waste Management and Quad Graphics

Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.31 times more return on investment than Quad Graphics. However, Waste Management is 3.23 times less risky than Quad Graphics. It trades about 0.06 of its potential returns per unit of risk. Quad Graphics is currently generating about -0.07 per unit of risk. If you would invest  20,648  in Waste Management on January 9, 2025 and sell it today you would earn a total of  999.00  from holding Waste Management or generate 4.84% return on investment over 90 days.

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

Waste Management  vs.  Quad Graphics

Waste Management

Risk-Adjusted Performance

Modest

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 current stock price disarray, may contribute to short-term losses for the investors.

Quad Graphics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quad Graphics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Waste Management and Quad Graphics

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

The idea behind Waste Management and Quad Graphics 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.