Correlation Between CompoSecure and Mueller Industries

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

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

Diversification Opportunities for CompoSecure and Mueller Industries

0.15

Correlation Coefficient

CompoSecure  Mueller Industries

Average diversification

The 3 months correlation between CompoSecure and Mueller is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries and CompoSecure 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 CompoSecure are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of CompoSecure i.e., CompoSecure and Mueller Industries go up and down completely randomly.

Pair Corralation between CompoSecure and Mueller Industries

Given the investment horizon of 90 days CompoSecure is expected to under-perform the Mueller Industries. In addition to that, CompoSecure is 1.9 times more volatile than Mueller Industries. It trades about -0.07 of its total potential returns per unit of risk. Mueller Industries is currently generating about -0.03 per unit of volatility. If you would invest  7,952  in Mueller Industries on December 30, 2024 and sell it today you would lose (293.00) from holding Mueller Industries or give up 3.68% of portfolio value over 90 days.

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

CompoSecure  vs.  Mueller Industries

CompoSecure

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompoSecure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mueller Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mueller Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Mueller Industries is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CompoSecure and Mueller Industries

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

The idea behind CompoSecure and Mueller Industries 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.