Correlation Between Matthews International and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Matthews International 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 Matthews International and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews International and Compass Diversified, you can compare the effects of market volatilities on Matthews International 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 Matthews International with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews International and Compass Diversified.
Diversification Opportunities for Matthews International and Compass Diversified
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Matthews and Compass is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Matthews International 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 Matthews International 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 Matthews International i.e., Matthews International and Compass Diversified go up and down completely randomly.
Pair Corralation between Matthews International and Compass Diversified
Given the investment horizon of 90 days Matthews International is expected to generate 3.61 times more return on investment than Compass Diversified. However, Matthews International is 3.61 times more volatile than Compass Diversified. It trades about 0.29 of its potential returns per unit of risk. Compass Diversified is currently generating about -0.31 per unit of risk. If you would invest 2,220 in Matthews International on August 24, 2024 and sell it today you would earn a total of 329.00 from holding Matthews International or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews International vs. Compass Diversified
Performance |
| Timeline |
| Matthews International |
| Compass Diversified |
Matthews International and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews International and Compass Diversified
The main advantage of trading using opposite Matthews International and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International 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.| Matthews International vs. Steel Partners Holdings | Matthews International vs. Compass Diversified | Matthews International vs. Brookfield Business Partners | Matthews International vs. Tejon Ranch Co |
| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Compass Diversified | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Tejon Ranch Co |
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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