Correlation Between Compass Diversified and Global Ship
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Diversified and Global Ship Lease, you can compare the effects of market volatilities on Compass Diversified and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Global Ship.
Diversification Opportunities for Compass Diversified and Global Ship
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Global is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Compass Diversified i.e., Compass Diversified and Global Ship go up and down completely randomly.
Pair Corralation between Compass Diversified and Global Ship
Assuming the 90 days trading horizon Compass Diversified is expected to under-perform the Global Ship. But the preferred stock apears to be less risky and, when comparing its historical volatility, Compass Diversified is 1.69 times less risky than Global Ship. The preferred stock trades about -0.37 of its potential returns per unit of risk. The Global Ship Lease is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,623 in Global Ship Lease on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Global Ship Lease or generate 0.27% 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. Global Ship Lease
Performance |
| Timeline |
| Compass Diversified |
| Global Ship Lease |
Compass Diversified and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Global Ship
The main advantage of trading using opposite Compass Diversified and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship'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 |
| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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