Correlation Between New York and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and Compass Diversified, you can compare the effects of market volatilities on New York 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 New York with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Compass Diversified.
Diversification Opportunities for New York and Compass Diversified
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Compass is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and New York 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 New York Mortgage 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 New York i.e., New York and Compass Diversified go up and down completely randomly.
Pair Corralation between New York and Compass Diversified
Assuming the 90 days horizon New York Mortgage is expected to generate 0.72 times more return on investment than Compass Diversified. However, New York Mortgage is 1.39 times less risky than Compass Diversified. It trades about 0.12 of its potential returns per unit of risk. Compass Diversified is currently generating about -0.38 per unit of risk. If you would invest 2,475 in New York Mortgage on August 28, 2024 and sell it today you would earn a total of 18.00 from holding New York Mortgage or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. Compass Diversified
Performance |
| Timeline |
| New York Mortgage |
| Compass Diversified |
New York and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Compass Diversified
The main advantage of trading using opposite New York and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. New York Mortgage | New York vs. AGNC Investment Corp | New York vs. Chimera Investment | New York vs. AGNC Investment Corp |
| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Tejon Ranch Co | 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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