Correlation Between CompX International and Brady
Can any of the company-specific risk be diversified away by investing in both CompX International and Brady 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 CompX International and Brady into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and Brady, you can compare the effects of market volatilities on CompX International and Brady 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 CompX International with a short position of Brady. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Brady.
Diversification Opportunities for CompX International and Brady
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CompX and Brady is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Brady in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brady and CompX International 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 CompX International are associated (or correlated) with Brady. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brady has no effect on the direction of CompX International i.e., CompX International and Brady go up and down completely randomly.
Pair Corralation between CompX International and Brady
Considering the 90-day investment horizon CompX International is expected to generate 2.9 times more return on investment than Brady. However, CompX International is 2.9 times more volatile than Brady. It trades about 0.05 of its potential returns per unit of risk. Brady is currently generating about 0.07 per unit of risk. If you would invest 1,631 in CompX International on August 27, 2024 and sell it today you would earn a total of 1,133 from holding CompX International or generate 69.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompX International vs. Brady
Performance |
| Timeline |
| CompX International |
| Brady |
CompX International and Brady Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and Brady
The main advantage of trading using opposite CompX International and Brady positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, Brady 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 Brady will offset losses from the drop in Brady's long position.| CompX International vs. Park Electrochemical | CompX International vs. Innovative Solutions and | CompX International vs. Curtiss Wright | CompX International vs. National Presto Industries |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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