Correlation Between Compass Diversified and 302635AL1

Can any of the company-specific risk be diversified away by investing in both Compass Diversified and 302635AL1 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 Diversified and 302635AL1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compass Diversified Holdings and FSK 325 15 JUL 27, you can compare the effects of market volatilities on Compass Diversified and 302635AL1 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 Diversified with a short position of 302635AL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and 302635AL1.

Diversification Opportunities for Compass Diversified and 302635AL1

0.4

Correlation Coefficient

Compass Diversified  302635AL1

Very weak diversification

The 3 months correlation between Compass and 302635AL1 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and FSK 325 15 JUL 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSK 325 15 and Compass Diversified 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 Diversified Holdings are associated (or correlated) with 302635AL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSK 325 15 has no effect on the direction of Compass Diversified i.e., Compass Diversified and 302635AL1 go up and down completely randomly.

Pair Corralation between Compass Diversified and 302635AL1

Assuming the 90 days trading horizon Compass Diversified Holdings is expected to under-perform the 302635AL1. In addition to that, Compass Diversified is 1.6 times more volatile than FSK 325 15 JUL 27. It trades about -0.03 of its total potential returns per unit of risk. FSK 325 15 JUL 27 is currently generating about 0.04 per unit of volatility. If you would invest  9,444  in FSK 325 15 JUL 27 on December 26, 2024 and sell it today you would earn a total of  123.00  from holding FSK 325 15 JUL 27 or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Compass Diversified Holdings  vs.  FSK 325 15 JUL 27

Compass Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Compass Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FSK 325 15

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FSK 325 15 JUL 27 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 302635AL1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compass Diversified and 302635AL1

The main advantage of trading using opposite Compass Diversified and 302635AL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, 302635AL1 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 302635AL1 will offset losses from the drop in 302635AL1's long position.

The idea behind Compass Diversified Holdings and FSK 325 15 JUL 27 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.