Correlation Between Compass Group and Ashtead Gro
Can any of the company-specific risk be diversified away by investing in both Compass Group and Ashtead Gro 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 Group and Ashtead Gro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Ashtead Gro, you can compare the effects of market volatilities on Compass Group and Ashtead Gro 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 Group with a short position of Ashtead Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Ashtead Gro.
Diversification Opportunities for Compass Group and Ashtead Gro
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compass and Ashtead is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Compass Group 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 Group PLC are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Compass Group i.e., Compass Group and Ashtead Gro go up and down completely randomly.
Pair Corralation between Compass Group and Ashtead Gro
Assuming the 90 days horizon Compass Group PLC is expected to generate 0.96 times more return on investment than Ashtead Gro. However, Compass Group PLC is 1.04 times less risky than Ashtead Gro. It trades about 0.17 of its potential returns per unit of risk. Ashtead Gro is currently generating about -0.35 per unit of risk. If you would invest 3,383 in Compass Group PLC on November 28, 2024 and sell it today you would earn a total of 170.00 from holding Compass Group PLC or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Compass Group PLC vs. Ashtead Gro
Performance |
| Timeline |
| Compass Group PLC |
| Ashtead Gro |
Compass Group and Ashtead Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Ashtead Gro
The main advantage of trading using opposite Compass Group and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Ashtead Gro 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 Ashtead Gro will offset losses from the drop in Ashtead Gro's long position.| Compass Group vs. Bunzl plc | Compass Group vs. Associated British Foods | Compass Group vs. Coloplast A | Compass Group vs. Experian plc PK |
| Ashtead Gro vs. African Discovery Group | Ashtead Gro vs. BOC Aviation Limited | Ashtead Gro vs. Black Diamond Group | Ashtead Gro vs. Alta Equipment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |