Correlation Between Mitsui and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Mitsui 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 Mitsui and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Company and Compass Diversified Holdings, you can compare the effects of market volatilities on Mitsui 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 Mitsui with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui and Compass Diversified.
Diversification Opportunities for Mitsui and Compass Diversified
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsui and Compass is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Company and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Mitsui 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 Mitsui Company 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 Mitsui i.e., Mitsui and Compass Diversified go up and down completely randomly.
Pair Corralation between Mitsui and Compass Diversified
If you would invest 2,170 in Compass Diversified Holdings on September 1, 2024 and sell it today you would earn a total of 194.00 from holding Compass Diversified Holdings or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Mitsui Company vs. Compass Diversified Holdings
Performance |
| Timeline |
| Mitsui Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Compass Diversified |
Mitsui and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui and Compass Diversified
The main advantage of trading using opposite Mitsui and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui 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.The idea behind Mitsui Company and Compass Diversified Holdings 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 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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