Correlation Between CHEMICAL INDUSTRIES and Compass Group
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES and Compass Group 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 CHEMICAL INDUSTRIES and Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and Compass Group PLC, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES and Compass Group 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 CHEMICAL INDUSTRIES with a short position of Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and Compass Group.
Diversification Opportunities for CHEMICAL INDUSTRIES and Compass Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and Compass is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and Compass Group go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and Compass Group
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 3.15 times less return on investment than Compass Group. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 3.09 times less risky than Compass Group. It trades about 0.09 of its potential returns per unit of risk. Compass Group PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,784 in Compass Group PLC on October 25, 2024 and sell it today you would earn a total of 426.00 from holding Compass Group PLC or generate 15.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. Compass Group PLC
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| Compass Group PLC |
CHEMICAL INDUSTRIES and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and Compass Group
The main advantage of trading using opposite CHEMICAL INDUSTRIES and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES position performs unexpectedly, Compass Group 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 Group will offset losses from the drop in Compass Group's long position.| CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc |
| Compass Group vs. CSSC Offshore Marine | Compass Group vs. FORWARD AIR P | Compass Group vs. Eidesvik Offshore ASA | Compass Group vs. Transport International Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |