Correlation Between Compass Group and Nathans Famous
Can any of the company-specific risk be diversified away by investing in both Compass Group and Nathans Famous 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 Nathans Famous 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 Nathans Famous, you can compare the effects of market volatilities on Compass Group and Nathans Famous 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 Nathans Famous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Nathans Famous.
Diversification Opportunities for Compass Group and Nathans Famous
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compass and Nathans is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous 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 Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Compass Group i.e., Compass Group and Nathans Famous go up and down completely randomly.
Pair Corralation between Compass Group and Nathans Famous
Assuming the 90 days horizon Compass Group PLC is expected to under-perform the Nathans Famous. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compass Group PLC is 2.87 times less risky than Nathans Famous. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Nathans Famous is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8,417 in Nathans Famous on August 27, 2024 and sell it today you would lose (12.00) from holding Nathans Famous or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Nathans Famous
Performance |
| Timeline |
| Compass Group PLC |
| Nathans Famous |
Compass Group and Nathans Famous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Nathans Famous
The main advantage of trading using opposite Compass Group and Nathans Famous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, Nathans Famous 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 Nathans Famous will offset losses from the drop in Nathans Famous' long position.| Compass Group vs. Bunzl plc | Compass Group vs. Associated British Foods | Compass Group vs. Coloplast A | Compass Group vs. Experian plc PK |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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