Correlation Between Compass Group and Jollibee Foods
Can any of the company-specific risk be diversified away by investing in both Compass Group and Jollibee Foods 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 Jollibee Foods 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 Jollibee Foods, you can compare the effects of market volatilities on Compass Group and Jollibee Foods 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 Jollibee Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Jollibee Foods.
Diversification Opportunities for Compass Group and Jollibee Foods
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Jollibee is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Jollibee Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods 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 Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods has no effect on the direction of Compass Group i.e., Compass Group and Jollibee Foods go up and down completely randomly.
Pair Corralation between Compass Group and Jollibee Foods
Assuming the 90 days horizon Compass Group PLC is expected to generate 0.58 times more return on investment than Jollibee Foods. However, Compass Group PLC is 1.72 times less risky than Jollibee Foods. It trades about 0.1 of its potential returns per unit of risk. Jollibee Foods is currently generating about -0.08 per unit of risk. If you would invest 3,349 in Compass Group PLC on September 14, 2024 and sell it today you would earn a total of 82.00 from holding Compass Group PLC or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Jollibee Foods
Performance |
| Timeline |
| Compass Group PLC |
| Jollibee Foods |
Compass Group and Jollibee Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Jollibee Foods
The main advantage of trading using opposite Compass Group and Jollibee Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Jollibee Foods 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 Jollibee Foods will offset losses from the drop in Jollibee Foods' long position.| Compass Group vs. Jollibee Foods Corp | Compass Group vs. Nathans Famous | Compass Group vs. Good Times Restaurants | Compass Group vs. Wingstop |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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