Correlation Between CompX International and Chicago Rivet

Can any of the company-specific risk be diversified away by investing in both CompX International and Chicago Rivet 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 CompX International and Chicago Rivet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompX International and Chicago Rivet Machine, you can compare the effects of market volatilities on CompX International and Chicago Rivet 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 CompX International with a short position of Chicago Rivet. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Chicago Rivet.

Diversification Opportunities for CompX International and Chicago Rivet

0.76

Correlation Coefficient

CompX International  Chicago Rivet

Poor diversification

The 3 months correlation between CompX and Chicago is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Chicago Rivet Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Rivet Machine and CompX International 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 CompX International are associated (or correlated) with Chicago Rivet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Rivet Machine has no effect on the direction of CompX International i.e., CompX International and Chicago Rivet go up and down completely randomly.

Pair Corralation between CompX International and Chicago Rivet

Considering the 90-day investment horizon CompX International is expected to under-perform the Chicago Rivet. In addition to that, CompX International is 1.33 times more volatile than Chicago Rivet Machine. It trades about -0.09 of its total potential returns per unit of risk. Chicago Rivet Machine is currently generating about -0.1 per unit of volatility. If you would invest  1,621  in Chicago Rivet Machine on December 28, 2024 and sell it today you would lose (221.00) from holding Chicago Rivet Machine or give up 13.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CompX International  vs.  Chicago Rivet Machine

CompX International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Chicago Rivet Machine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chicago Rivet Machine has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CompX International and Chicago Rivet

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

The idea behind CompX International and Chicago Rivet Machine 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.