Correlation Between Compass Group and CT Global
Can any of the company-specific risk be diversified away by investing in both Compass Group and CT Global 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 Group and CT Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and CT Global Managed, you can compare the effects of market volatilities on Compass Group and CT Global 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 Group with a short position of CT Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and CT Global.
Diversification Opportunities for Compass Group and CT Global
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compass and CMPG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and CT Global Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CT Global Managed and Compass Group 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 Group PLC are associated (or correlated) with CT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CT Global Managed has no effect on the direction of Compass Group i.e., Compass Group and CT Global go up and down completely randomly.
Pair Corralation between Compass Group and CT Global
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 2.62 times more return on investment than CT Global. However, Compass Group is 2.62 times more volatile than CT Global Managed. It trades about 0.08 of its potential returns per unit of risk. CT Global Managed is currently generating about 0.05 per unit of risk. If you would invest 184,307 in Compass Group PLC on August 30, 2024 and sell it today you would earn a total of 86,293 from holding Compass Group PLC or generate 46.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Compass Group PLC vs. CT Global Managed
Performance |
| Timeline |
| Compass Group PLC |
| CT Global Managed |
Compass Group and CT Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and CT Global
The main advantage of trading using opposite Compass Group and CT Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group position performs unexpectedly, CT Global 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 CT Global will offset losses from the drop in CT Global's long position.| Compass Group vs. Fresenius Medical Care | Compass Group vs. Albion Technology General | Compass Group vs. DXC Technology Co | Compass Group vs. Monster Beverage Corp |
| CT Global vs. McEwen Mining | CT Global vs. Lundin Mining Corp | CT Global vs. Cairn Homes PLC | CT Global vs. Hochschild Mining plc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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