Correlation Between Marchex and CompX International

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

By analyzing existing cross correlation between Marchex and CompX International, you can compare the effects of market volatilities on Marchex and CompX International 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 Marchex with a short position of CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and CompX International.

Diversification Opportunities for Marchex and CompX International

0.19

Correlation Coefficient

Marchex  CompX International

Average diversification

The 3 months correlation between Marchex and CompX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Marchex 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 Marchex are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Marchex i.e., Marchex and CompX International go up and down completely randomly.

Pair Corralation between Marchex and CompX International

Given the investment horizon of 90 days Marchex is expected to generate 0.85 times more return on investment than CompX International. However, Marchex is 1.18 times less risky than CompX International. It trades about 0.05 of its potential returns per unit of risk. CompX International is currently generating about -0.17 per unit of risk. If you would invest  185.00  in Marchex on October 6, 2024 and sell it today you would earn a total of  5.00  from holding Marchex or generate 2.7% return on investment over 90 days.

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

Marchex  vs.  CompX International

Marchex

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CompX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, CompX International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marchex and CompX International

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

The idea behind Marchex and CompX International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.