Correlation Between Hasbro and Compass Digital
Can any of the company-specific risk be diversified away by investing in both Hasbro and Compass Digital 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 Hasbro and Compass Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Compass Digital Acquisition, you can compare the effects of market volatilities on Hasbro and Compass Digital 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 Hasbro with a short position of Compass Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Compass Digital.
Diversification Opportunities for Hasbro and Compass Digital
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hasbro and Compass is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Compass Digital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Digital Acqu and Hasbro 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 Hasbro Inc are associated (or correlated) with Compass Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Digital Acqu has no effect on the direction of Hasbro i.e., Hasbro and Compass Digital go up and down completely randomly.
Pair Corralation between Hasbro and Compass Digital
Considering the 90-day investment horizon Hasbro is expected to generate 884.9 times less return on investment than Compass Digital. But when comparing it to its historical volatility, Hasbro Inc is 159.41 times less risky than Compass Digital. It trades about 0.04 of its potential returns per unit of risk. Compass Digital Acquisition is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3.98 in Compass Digital Acquisition on September 12, 2024 and sell it today you would earn a total of 2.35 from holding Compass Digital Acquisition or generate 59.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 38.4% |
| Values | Daily Returns |
Hasbro Inc vs. Compass Digital Acquisition
Performance |
| Timeline |
| Hasbro Inc |
| Compass Digital Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Hasbro and Compass Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Compass Digital
The main advantage of trading using opposite Hasbro and Compass Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Compass Digital 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 Digital will offset losses from the drop in Compass Digital's long position.The idea behind Hasbro Inc and Compass Digital Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Compass Digital vs. Hasbro Inc | Compass Digital vs. United Parks Resorts | Compass Digital vs. SL Green Realty | Compass Digital vs. Bassett Furniture Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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