Correlation Between CompX International and DLH Holdings
Can any of the company-specific risk be diversified away by investing in both CompX International and DLH Holdings 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 DLH Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and DLH Holdings Corp, you can compare the effects of market volatilities on CompX International and DLH Holdings 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 DLH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and DLH Holdings.
Diversification Opportunities for CompX International and DLH Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CompX and DLH is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and DLH Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLH Holdings Corp 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 DLH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLH Holdings Corp has no effect on the direction of CompX International i.e., CompX International and DLH Holdings go up and down completely randomly.
Pair Corralation between CompX International and DLH Holdings
Considering the 90-day investment horizon CompX International is expected to generate 0.71 times more return on investment than DLH Holdings. However, CompX International is 1.41 times less risky than DLH Holdings. It trades about -0.1 of its potential returns per unit of risk. DLH Holdings Corp is currently generating about -0.6 per unit of risk. If you would invest 2,115 in CompX International on January 7, 2025 and sell it today you would lose (104.00) from holding CompX International or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompX International vs. DLH Holdings Corp
Performance |
| Timeline |
| CompX International |
| DLH Holdings Corp |
CompX International and DLH Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and DLH Holdings
The main advantage of trading using opposite CompX International and DLH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, DLH Holdings 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 DLH Holdings will offset losses from the drop in DLH Holdings' long position.| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
| DLH Holdings vs. ExlService Holdings | DLH Holdings vs. WNS Holdings | DLH Holdings vs. Gartner | DLH Holdings vs. The Hackett Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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