Correlation Between Compass Diversified and Silvercrest Asset

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

Diversification Opportunities for Compass Diversified and Silvercrest Asset

0.58

Correlation Coefficient

Compass Diversified  Silvercrest Asset

Very weak diversification

The 3 months correlation between Compass and Silvercrest is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset 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 Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of Compass Diversified i.e., Compass Diversified and Silvercrest Asset go up and down completely randomly.

Pair Corralation between Compass Diversified and Silvercrest Asset

Given the investment horizon of 90 days Compass Diversified Holdings is expected to under-perform the Silvercrest Asset. In addition to that, Compass Diversified is 1.32 times more volatile than Silvercrest Asset Management. It trades about -0.14 of its total potential returns per unit of risk. Silvercrest Asset Management is currently generating about -0.11 per unit of volatility. If you would invest  1,801  in Silvercrest Asset Management on December 23, 2024 and sell it today you would lose (173.00) from holding Silvercrest Asset Management or give up 9.61% of portfolio value over 90 days.

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

Compass Diversified Holdings  vs.  Silvercrest Asset Management

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.

Silvercrest Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silvercrest Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Compass Diversified and Silvercrest Asset

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

The idea behind Compass Diversified Holdings and Silvercrest Asset Management 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.