Correlation Between CompoSecure and TravelCenters

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

By analyzing existing cross correlation between CompoSecure and TravelCenters Of America, you can compare the effects of market volatilities on CompoSecure and TravelCenters 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 TravelCenters. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and TravelCenters.

Diversification Opportunities for CompoSecure and TravelCenters

0.68

Correlation Coefficient

CompoSecure  TravelCenters

Poor diversification

The 3 months correlation between CompoSecure and TravelCenters is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and TravelCenters Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelCenters Of America 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 TravelCenters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelCenters Of America has no effect on the direction of CompoSecure i.e., CompoSecure and TravelCenters go up and down completely randomly.

Pair Corralation between CompoSecure and TravelCenters

If you would invest  1,381  in CompoSecure on September 16, 2024 and sell it today you would earn a total of  274.00  from holding CompoSecure or generate 19.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

CompoSecure  vs.  TravelCenters Of America

CompoSecure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, CompoSecure displayed solid returns over the last few months and may actually be approaching a breakup point.

TravelCenters Of America

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CompoSecure and TravelCenters

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

The idea behind CompoSecure and TravelCenters Of America 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.