Correlation Between Compass Diversified and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Chimera Investment 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 Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and Chimera Investment, you can compare the effects of market volatilities on Compass Diversified and Chimera Investment 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 Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Chimera Investment.
Diversification Opportunities for Compass Diversified and Chimera Investment
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Chimera is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Compass Diversified i.e., Compass Diversified and Chimera Investment go up and down completely randomly.
Pair Corralation between Compass Diversified and Chimera Investment
Assuming the 90 days trading horizon Compass Diversified is expected to under-perform the Chimera Investment. But the preferred stock apears to be less risky and, when comparing its historical volatility, Compass Diversified is 1.16 times less risky than Chimera Investment. The preferred stock trades about -0.59 of its potential returns per unit of risk. The Chimera Investment is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,470 in Chimera Investment on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Chimera Investment or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Diversified vs. Chimera Investment
Performance |
| Timeline |
| Compass Diversified |
| Chimera Investment |
Compass Diversified and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Chimera Investment
The main advantage of trading using opposite Compass Diversified and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Tejon Ranch Co | Compass Diversified vs. Brookfield Business Partners |
| Chimera Investment vs. Chimera Investment | Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Chimera Investment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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