Correlation Between Compass Diversified and 303075AA3

Can any of the company-specific risk be diversified away by investing in both Compass Diversified and 303075AA3 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 303075AA3 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 FDS 29 01 MAR 27, you can compare the effects of market volatilities on Compass Diversified and 303075AA3 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 303075AA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and 303075AA3.

Diversification Opportunities for Compass Diversified and 303075AA3

-0.33

Correlation Coefficient

Compass Diversified  303075AA3

Very good diversification

The 3 months correlation between Compass and 303075AA3 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and FDS 29 01 MAR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDS 29 01 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 303075AA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDS 29 01 has no effect on the direction of Compass Diversified i.e., Compass Diversified and 303075AA3 go up and down completely randomly.

Pair Corralation between Compass Diversified and 303075AA3

Assuming the 90 days trading horizon Compass Diversified Holdings is expected to generate 2.43 times more return on investment than 303075AA3. However, Compass Diversified is 2.43 times more volatile than FDS 29 01 MAR 27. It trades about 0.03 of its potential returns per unit of risk. FDS 29 01 MAR 27 is currently generating about -0.14 per unit of risk. If you would invest  2,393  in Compass Diversified Holdings on October 25, 2024 and sell it today you would earn a total of  37.00  from holding Compass Diversified Holdings or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Compass Diversified Holdings  vs.  FDS 29 01 MAR 27

Compass Diversified

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

FDS 29 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FDS 29 01 MAR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 303075AA3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compass Diversified and 303075AA3

The main advantage of trading using opposite Compass Diversified and 303075AA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, 303075AA3 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 303075AA3 will offset losses from the drop in 303075AA3's long position.

The idea behind Compass Diversified Holdings and FDS 29 01 MAR 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.