Correlation Between CompoSecure and Gulf Island
Can any of the company-specific risk be diversified away by investing in both CompoSecure and Gulf Island 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 CompoSecure and Gulf Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompoSecure and Gulf Island Fabrication, you can compare the effects of market volatilities on CompoSecure and Gulf Island 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 CompoSecure with a short position of Gulf Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and Gulf Island.
Diversification Opportunities for CompoSecure and Gulf Island
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CompoSecure and Gulf is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Gulf Island Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Island Fabrication and CompoSecure 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 CompoSecure are associated (or correlated) with Gulf Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Island Fabrication has no effect on the direction of CompoSecure i.e., CompoSecure and Gulf Island go up and down completely randomly.
Pair Corralation between CompoSecure and Gulf Island
Given the investment horizon of 90 days CompoSecure is expected to generate 10.91 times less return on investment than Gulf Island. But when comparing it to its historical volatility, CompoSecure is 1.46 times less risky than Gulf Island. It trades about 0.04 of its potential returns per unit of risk. Gulf Island Fabrication is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 547.00 in Gulf Island Fabrication on August 24, 2024 and sell it today you would earn a total of 163.00 from holding Gulf Island Fabrication or generate 29.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CompoSecure vs. Gulf Island Fabrication
Performance |
| Timeline |
| CompoSecure |
| Gulf Island Fabrication |
CompoSecure and Gulf Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompoSecure and Gulf Island
The main advantage of trading using opposite CompoSecure and Gulf Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, Gulf Island 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 Gulf Island will offset losses from the drop in Gulf Island's long position.| CompoSecure vs. Northwest Pipe | CompoSecure vs. Insteel Industries | CompoSecure vs. Carpenter Technology | CompoSecure vs. ESAB Corp |
| Gulf Island vs. Haynes International | Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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