Correlation Between Compass Diversified and Seaboard
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Seaboard 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 Seaboard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and Seaboard, you can compare the effects of market volatilities on Compass Diversified and Seaboard 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 Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Seaboard.
Diversification Opportunities for Compass Diversified and Seaboard
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and Seaboard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of Compass Diversified i.e., Compass Diversified and Seaboard go up and down completely randomly.
Pair Corralation between Compass Diversified and Seaboard
Assuming the 90 days trading horizon Compass Diversified is expected to generate 0.49 times more return on investment than Seaboard. However, Compass Diversified is 2.05 times less risky than Seaboard. It trades about 0.02 of its potential returns per unit of risk. Seaboard is currently generating about -0.09 per unit of risk. If you would invest 2,252 in Compass Diversified on November 9, 2024 and sell it today you would earn a total of 87.00 from holding Compass Diversified or generate 3.86% 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. Seaboard
Performance |
| Timeline |
| Compass Diversified |
| Seaboard |
Compass Diversified and Seaboard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Seaboard
The main advantage of trading using opposite Compass Diversified and Seaboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Seaboard 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 Seaboard will offset losses from the drop in Seaboard's long position.| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Compass Diversified | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Tejon Ranch Co |
| Seaboard vs. White Mountains Insurance | Seaboard vs. Cable One | Seaboard vs. NVR Inc | Seaboard vs. Alexanders |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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