Correlation Between Compass Diversified and Jardine Matheson
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Jardine Matheson 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 Jardine Matheson 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 Jardine Matheson Holdings, you can compare the effects of market volatilities on Compass Diversified and Jardine Matheson 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 Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Jardine Matheson.
Diversification Opportunities for Compass Diversified and Jardine Matheson
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compass and Jardine is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Compass Diversified i.e., Compass Diversified and Jardine Matheson go up and down completely randomly.
Pair Corralation between Compass Diversified and Jardine Matheson
Given the investment horizon of 90 days Compass Diversified is expected to generate 1.41 times less return on investment than Jardine Matheson. In addition to that, Compass Diversified is 1.52 times more volatile than Jardine Matheson Holdings. It trades about 0.22 of its total potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.47 per unit of volatility. If you would invest 3,832 in Jardine Matheson Holdings on September 1, 2024 and sell it today you would earn a total of 505.00 from holding Jardine Matheson Holdings or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Diversified Holdings vs. Jardine Matheson Holdings
Performance |
| Timeline |
| Compass Diversified |
| Jardine Matheson Holdings |
Compass Diversified and Jardine Matheson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Jardine Matheson
The main advantage of trading using opposite Compass Diversified and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.| Compass Diversified vs. Matthews International | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Valmont Industries | Compass Diversified vs. Brookfield Business Partners |
| Jardine Matheson vs. Seychelle Environmtl | Jardine Matheson vs. Energy and Water | Jardine Matheson vs. One World Universe | Jardine Matheson vs. Vow ASA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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