Correlation Between Compass Diversified and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Worthington Steel 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 Diversified and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified Holdings and Worthington Steel, you can compare the effects of market volatilities on Compass Diversified and Worthington Steel 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 Diversified with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Worthington Steel.
Diversification Opportunities for Compass Diversified and Worthington Steel
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Worthington is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Compass Diversified 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 Diversified Holdings are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Compass Diversified i.e., Compass Diversified and Worthington Steel go up and down completely randomly.
Pair Corralation between Compass Diversified and Worthington Steel
Assuming the 90 days trading horizon Compass Diversified Holdings is expected to generate 0.52 times more return on investment than Worthington Steel. However, Compass Diversified Holdings is 1.92 times less risky than Worthington Steel. It trades about -0.12 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.12 per unit of risk. If you would invest 2,416 in Compass Diversified Holdings on November 5, 2024 and sell it today you would lose (66.00) from holding Compass Diversified Holdings or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Diversified Holdings vs. Worthington Steel
Performance |
| Timeline |
| Compass Diversified |
| Worthington Steel |
Compass Diversified and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Worthington Steel
The main advantage of trading using opposite Compass Diversified and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.| Compass Diversified vs. Iridium Communications | Compass Diversified vs. BK Technologies | Compass Diversified vs. Borr Drilling | Compass Diversified vs. Tenaris SA ADR |
| Worthington Steel vs. Pearson PLC ADR | Worthington Steel vs. Zane Interactive Publishing | Worthington Steel vs. Reservoir Media | Worthington Steel vs. Vasta Platform |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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