Correlation Between Big Buck and Compass Group
Can any of the company-specific risk be diversified away by investing in both Big Buck 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 Big Buck and Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Buck Brewery and Compass Group PLC, you can compare the effects of market volatilities on Big Buck 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 Big Buck with a short position of Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Buck and Compass Group.
Diversification Opportunities for Big Buck and Compass Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Big and Compass is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Buck Brewery 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 Big Buck 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 Big Buck Brewery 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 Big Buck i.e., Big Buck and Compass Group go up and down completely randomly.
Pair Corralation between Big Buck and Compass Group
Assuming the 90 days horizon Big Buck Brewery is expected to under-perform the Compass Group. In addition to that, Big Buck is 4.4 times more volatile than Compass Group PLC. It trades about -0.07 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.05 per unit of volatility. If you would invest 2,038 in Compass Group PLC on January 19, 2024 and sell it today you would earn a total of 652.00 from holding Compass Group PLC or generate 31.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 39.8% |
| Values | Daily Returns |
Big Buck Brewery vs. Compass Group PLC
Performance |
| Timeline |
| Big Buck Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Compass Group PLC |
Big Buck and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Buck and Compass Group
The main advantage of trading using opposite Big Buck and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Buck 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.| Big Buck vs. Small Cap Premium | Big Buck vs. AssetMark Financial Holdings | Big Buck vs. Ace Global Business | Big Buck vs. Inflection Point Acquisition |
| Compass Group vs. McDonalds | Compass Group vs. Chuys Holdings | Compass Group vs. Brinker International | Compass Group vs. Bloomin Brands |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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