Correlation Between Compass Diversified and Falcons Beyond

Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Falcons Beyond 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 Falcons Beyond 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 Falcons Beyond Global,, you can compare the effects of market volatilities on Compass Diversified and Falcons Beyond 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 Falcons Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Falcons Beyond.

Diversification Opportunities for Compass Diversified and Falcons Beyond

0.05

Correlation Coefficient

Compass Diversified  Falcons Beyond

Significant diversification

The 3 months correlation between Compass and Falcons is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Compass Diversified i.e., Compass Diversified and Falcons Beyond go up and down completely randomly.

Pair Corralation between Compass Diversified and Falcons Beyond

Given the investment horizon of 90 days Compass Diversified Holdings is expected to under-perform the Falcons Beyond. But the stock apears to be less risky and, when comparing its historical volatility, Compass Diversified Holdings is 4.02 times less risky than Falcons Beyond. The stock trades about -0.12 of its potential returns per unit of risk. The Falcons Beyond Global, is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  891.00  in Falcons Beyond Global, on December 21, 2024 and sell it today you would lose (51.00) from holding Falcons Beyond Global, or give up 5.72% of portfolio value over 90 days.

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

Compass Diversified Holdings  vs.  Falcons Beyond Global,

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 abnormal performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Falcons Beyond Global,

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Falcons Beyond may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Compass Diversified and Falcons Beyond

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

The idea behind Compass Diversified Holdings and Falcons Beyond Global, 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 Commodity Directory module to find actively traded commodities issued by global exchanges.