Correlation Between DigitalBridge and Compass
Can any of the company-specific risk be diversified away by investing in both DigitalBridge and Compass 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 DigitalBridge and Compass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DigitalBridge Group and Compass, you can compare the effects of market volatilities on DigitalBridge and Compass 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 DigitalBridge with a short position of Compass. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigitalBridge and Compass.
Diversification Opportunities for DigitalBridge and Compass
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between DigitalBridge and Compass is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and Compass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass and DigitalBridge 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 DigitalBridge Group are associated (or correlated) with Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass has no effect on the direction of DigitalBridge i.e., DigitalBridge and Compass go up and down completely randomly.
Pair Corralation between DigitalBridge and Compass
Assuming the 90 days trading horizon DigitalBridge Group is expected to under-perform the Compass. But the preferred stock apears to be less risky and, when comparing its historical volatility, DigitalBridge Group is 4.25 times less risky than Compass. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Compass is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 565.00 in Compass on September 26, 2024 and sell it today you would earn a total of 35.00 from holding Compass or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DigitalBridge Group vs. Compass
Performance |
| Timeline |
| DigitalBridge Group |
| Compass |
DigitalBridge and Compass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DigitalBridge and Compass
The main advantage of trading using opposite DigitalBridge and Compass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigitalBridge position performs unexpectedly, Compass 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 Compass will offset losses from the drop in Compass' long position.| DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. Chimera Investment | DigitalBridge vs. Cherry Hill Mortgage |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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