Correlation Between Compass Group and One Group
Can any of the company-specific risk be diversified away by investing in both Compass Group and One Group 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 One Group 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 One Group Hospitality, you can compare the effects of market volatilities on Compass Group and One Group 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 One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and One Group.
Diversification Opportunities for Compass Group and One Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and One is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality 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 One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Compass Group i.e., Compass Group and One Group go up and down completely randomly.
Pair Corralation between Compass Group and One Group
Assuming the 90 days horizon Compass Group PLC is expected to under-perform the One Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compass Group PLC is 3.96 times less risky than One Group. The pink sheet trades about -0.15 of its potential returns per unit of risk. The One Group Hospitality is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 275.00 in One Group Hospitality on October 20, 2024 and sell it today you would earn a total of 57.00 from holding One Group Hospitality or generate 20.73% 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. One Group Hospitality
Performance |
| Timeline |
| Compass Group PLC |
| One Group Hospitality |
Compass Group and One Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and One Group
The main advantage of trading using opposite Compass Group and One Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, One Group 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 One Group will offset losses from the drop in One Group'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 |
| One Group vs. FAT Brands | One Group vs. Potbelly Co | One Group vs. BJs Restaurants | One Group vs. Rave Restaurant 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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