Correlation Between Alpine 4 and Compass Diversified

Can any of the company-specific risk be diversified away by investing in both Alpine 4 and Compass Diversified 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 Alpine 4 and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpine 4 Holdings and Compass Diversified, you can compare the effects of market volatilities on Alpine 4 and Compass Diversified 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 Alpine 4 with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine 4 and Compass Diversified.

Diversification Opportunities for Alpine 4 and Compass Diversified

0.0

Correlation Coefficient

Alpine 4  Compass Diversified

Pay attention - limited upside

The 3 months correlation between Alpine and Compass is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpine 4 Holdings and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Alpine 4 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 Alpine 4 Holdings are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Alpine 4 i.e., Alpine 4 and Compass Diversified go up and down completely randomly.

Pair Corralation between Alpine 4 and Compass Diversified

If you would invest  2,315  in Compass Diversified on November 28, 2024 and sell it today you would earn a total of  60.00  from holding Compass Diversified or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alpine 4 Holdings  vs.  Compass Diversified

Alpine 4 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpine 4 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alpine 4 is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Compass Diversified

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Compass Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine 4 and Compass Diversified

The main advantage of trading using opposite Alpine 4 and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine 4 position performs unexpectedly, Compass Diversified 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 Diversified will offset losses from the drop in Compass Diversified's long position.

The idea behind Alpine 4 Holdings and Compass Diversified 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.