Correlation Between Compass Diversified and RB Global
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and RB Global 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 RB Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and RB Global, you can compare the effects of market volatilities on Compass Diversified and RB Global 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 RB Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and RB Global.
Diversification Opportunities for Compass Diversified and RB Global
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compass and RBA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and RB Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Global 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 are associated (or correlated) with RB Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Global has no effect on the direction of Compass Diversified i.e., Compass Diversified and RB Global go up and down completely randomly.
Pair Corralation between Compass Diversified and RB Global
Assuming the 90 days trading horizon Compass Diversified is expected to under-perform the RB Global. In addition to that, Compass Diversified is 1.24 times more volatile than RB Global. It trades about -0.07 of its total potential returns per unit of risk. RB Global is currently generating about 0.07 per unit of volatility. If you would invest 9,036 in RB Global on November 9, 2024 and sell it today you would earn a total of 123.00 from holding RB Global or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Diversified vs. RB Global
Performance |
| Timeline |
| Compass Diversified |
| RB Global |
Compass Diversified and RB Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and RB Global
The main advantage of trading using opposite Compass Diversified and RB Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, RB Global 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 RB Global will offset losses from the drop in RB Global's long position.| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Brookfield Business Partners | Compass Diversified vs. Matthews International | Compass Diversified vs. Tejon Ranch Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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