Correlation Between Jardine Matheson and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Jardine Matheson and Compass Diversified 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 Jardine Matheson and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jardine Matheson Holdings and Compass Diversified Holdings, you can compare the effects of market volatilities on Jardine Matheson and Compass Diversified 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 Jardine Matheson with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jardine Matheson and Compass Diversified.
Diversification Opportunities for Jardine Matheson and Compass Diversified
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jardine and Compass is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Jardine Matheson 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 Jardine Matheson Holdings are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Jardine Matheson i.e., Jardine Matheson and Compass Diversified go up and down completely randomly.
Pair Corralation between Jardine Matheson and Compass Diversified
Assuming the 90 days horizon Jardine Matheson Holdings is expected to generate 0.75 times more return on investment than Compass Diversified. However, Jardine Matheson Holdings is 1.33 times less risky than Compass Diversified. It trades about 0.43 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about 0.26 per unit of risk. If you would invest 3,726 in Jardine Matheson Holdings on August 29, 2024 and sell it today you would earn a total of 614.00 from holding Jardine Matheson Holdings or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jardine Matheson Holdings vs. Compass Diversified Holdings
Performance |
| Timeline |
| Jardine Matheson Holdings |
| Compass Diversified |
Jardine Matheson and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jardine Matheson and Compass Diversified
The main advantage of trading using opposite Jardine Matheson and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jardine Matheson position performs unexpectedly, Compass Diversified 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 Diversified will offset losses from the drop in Compass Diversified's long position.| Jardine Matheson vs. Element Solutions | Jardine Matheson vs. Orion Engineered Carbons | Jardine Matheson vs. Minerals Technologies | Jardine Matheson vs. Ingevity Corp |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |