Correlation Between XLMedia PLC and Compass Group
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC 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 XLMedia PLC and Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and Compass Group PLC, you can compare the effects of market volatilities on XLMedia PLC 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 XLMedia PLC with a short position of Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Compass Group.
Diversification Opportunities for XLMedia PLC and Compass Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XLMedia and Compass is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Compass Group go up and down completely randomly.
Pair Corralation between XLMedia PLC and Compass Group
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 35.34 times less return on investment than Compass Group. In addition to that, XLMedia PLC is 1.71 times more volatile than Compass Group PLC. It trades about 0.01 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.39 per unit of volatility. If you would invest 251,500 in Compass Group PLC on September 1, 2024 and sell it today you would earn a total of 17,600 from holding Compass Group PLC or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. Compass Group PLC
Performance |
| Timeline |
| XLMedia PLC |
| Compass Group PLC |
XLMedia PLC and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and Compass Group
The main advantage of trading using opposite XLMedia PLC and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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.| XLMedia PLC vs. Uniper SE | XLMedia PLC vs. Mulberry Group PLC | XLMedia PLC vs. London Security Plc | XLMedia PLC vs. Triad Group PLC |
| Compass Group vs. G5 Entertainment AB | Compass Group vs. XLMedia PLC | Compass Group vs. Centaur Media | Compass Group vs. Flutter Entertainment PLC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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