Correlation Between Seaboard and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Seaboard 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 Seaboard and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seaboard and Compass Diversified, you can compare the effects of market volatilities on Seaboard 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 Seaboard with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and Compass Diversified.
Diversification Opportunities for Seaboard and Compass Diversified
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seaboard and Compass is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Seaboard 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 Seaboard 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 Seaboard i.e., Seaboard and Compass Diversified go up and down completely randomly.
Pair Corralation between Seaboard and Compass Diversified
Considering the 90-day investment horizon Seaboard is expected to generate 1.69 times more return on investment than Compass Diversified. However, Seaboard is 1.69 times more volatile than Compass Diversified. It trades about 0.03 of its potential returns per unit of risk. Compass Diversified is currently generating about -0.04 per unit of risk. If you would invest 248,184 in Seaboard on November 9, 2024 and sell it today you would earn a total of 1,343 from holding Seaboard or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seaboard vs. Compass Diversified
Performance |
| Timeline |
| Seaboard |
| Compass Diversified |
Seaboard and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seaboard and Compass Diversified
The main advantage of trading using opposite Seaboard and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard 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.| Seaboard vs. White Mountains Insurance | Seaboard vs. Cable One | Seaboard vs. NVR Inc | Seaboard vs. Alexanders |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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