Correlation Between Compass Diversified and Marubeni
Can any of the company-specific risk be diversified away by investing in both Compass Diversified and Marubeni 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 Marubeni 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 Marubeni, you can compare the effects of market volatilities on Compass Diversified and Marubeni 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 Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Marubeni.
Diversification Opportunities for Compass Diversified and Marubeni
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and Marubeni is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Compass Diversified i.e., Compass Diversified and Marubeni go up and down completely randomly.
Pair Corralation between Compass Diversified and Marubeni
Given the investment horizon of 90 days Compass Diversified is expected to generate 1.41 times less return on investment than Marubeni. But when comparing it to its historical volatility, Compass Diversified Holdings is 2.11 times less risky than Marubeni. It trades about 0.22 of its potential returns per unit of risk. Marubeni is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,427 in Marubeni on September 1, 2024 and sell it today you would earn a total of 173.00 from holding Marubeni or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Compass Diversified Holdings vs. Marubeni
Performance |
| Timeline |
| Compass Diversified |
| Marubeni |
Compass Diversified and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Diversified and Marubeni
The main advantage of trading using opposite Compass Diversified and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni'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 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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