Correlation Between COMPASS MINERALS and COMPASS GROUP

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

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

Diversification Opportunities for COMPASS MINERALS and COMPASS GROUP

0.0

Correlation Coefficient

COMPASS MINERALS  COMPASS GROUP

Pay attention - limited upside

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

Pair Corralation between COMPASS MINERALS and COMPASS GROUP

If you would invest  2,440  in COMPASS GROUP on October 7, 2024 and sell it today you would earn a total of  640.00  from holding COMPASS GROUP or generate 26.23% return on investment over 90 days.

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

COMPASS MINERALS  vs.  COMPASS GROUP

COMPASS MINERALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMPASS MINERALS has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

COMPASS GROUP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COMPASS GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COMPASS GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMPASS MINERALS and COMPASS GROUP

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

The idea behind COMPASS MINERALS and COMPASS GROUP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.