Correlation Between ARDAGH METAL and COMPASS MINERALS

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and COMPASS MINERALS 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 ARDAGH METAL and COMPASS MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and COMPASS MINERALS, you can compare the effects of market volatilities on ARDAGH METAL and COMPASS MINERALS 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 ARDAGH METAL with a short position of COMPASS MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and COMPASS MINERALS.

Diversification Opportunities for ARDAGH METAL and COMPASS MINERALS

0.47

Correlation Coefficient

ARDAGH METAL  COMPASS MINERALS

Very weak diversification

The 3 months correlation between ARDAGH and COMPASS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and COMPASS MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS MINERALS and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with COMPASS MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS MINERALS has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and COMPASS MINERALS go up and down completely randomly.

Pair Corralation between ARDAGH METAL and COMPASS MINERALS

Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to generate 0.45 times more return on investment than COMPASS MINERALS. However, ARDAGH METAL PACDL 0001 is 2.23 times less risky than COMPASS MINERALS. It trades about -0.34 of its potential returns per unit of risk. COMPASS MINERALS is currently generating about -0.18 per unit of risk. If you would invest  318.00  in ARDAGH METAL PACDL 0001 on October 9, 2024 and sell it today you would lose (36.00) from holding ARDAGH METAL PACDL 0001 or give up 11.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

ARDAGH METAL PACDL 0001  vs.  COMPASS MINERALS

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COMPASS MINERALS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COMPASS MINERALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COMPASS MINERALS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ARDAGH METAL and COMPASS MINERALS

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

The idea behind ARDAGH METAL PACDL 0001 and COMPASS MINERALS 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.