Correlation Between Compass Diversified and Fortress Transportation
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Fortress Transportation 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 Fortress Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and Fortress Transportation and, you can compare the effects of market volatilities on Compass Diversified and Fortress Transportation 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 Fortress Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Fortress Transportation.
Diversification Opportunities for Compass Diversified and Fortress Transportation
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and Fortress is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and Fortress Transportation and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transportation 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 are associated (or correlated) with Fortress Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transportation has no effect on the direction of Compass Diversified i.e., Compass Diversified and Fortress Transportation go up and down completely randomly.
Pair Corralation between Compass Diversified and Fortress Transportation
Assuming the 90 days trading horizon Compass Diversified is expected to generate 0.92 times more return on investment than Fortress Transportation. However, Compass Diversified is 1.09 times less risky than Fortress Transportation. It trades about 0.03 of its potential returns per unit of risk. Fortress Transportation and is currently generating about -0.01 per unit of risk. If you would invest 2,333 in Compass Diversified on November 22, 2024 and sell it today you would earn a total of 27.00 from holding Compass Diversified or generate 1.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Compass Diversified vs. Fortress Transportation and
Performance |
Timeline |
Compass Diversified |
Fortress Transportation |
Compass Diversified and Fortress Transportation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compass Diversified and Fortress Transportation
The main advantage of trading using opposite Compass Diversified and Fortress Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Fortress Transportation 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 Fortress Transportation will offset losses from the drop in Fortress Transportation's long position.Compass Diversified vs. Steel Partners Holdings | ||
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Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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