Correlation Between CompX International and TrueBlue

Can any of the company-specific risk be diversified away by investing in both CompX International and TrueBlue 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 CompX International and TrueBlue into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompX International and TrueBlue, you can compare the effects of market volatilities on CompX International and TrueBlue 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 CompX International with a short position of TrueBlue. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and TrueBlue.

Diversification Opportunities for CompX International and TrueBlue

0.87

Correlation Coefficient

CompX International  TrueBlue

Very poor diversification

The 3 months correlation between CompX and TrueBlue is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and TrueBlue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueBlue and CompX International 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 CompX International are associated (or correlated) with TrueBlue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueBlue has no effect on the direction of CompX International i.e., CompX International and TrueBlue go up and down completely randomly.

Pair Corralation between CompX International and TrueBlue

Considering the 90-day investment horizon CompX International is expected to generate 0.73 times more return on investment than TrueBlue. However, CompX International is 1.36 times less risky than TrueBlue. It trades about -0.08 of its potential returns per unit of risk. TrueBlue is currently generating about -0.18 per unit of risk. If you would invest  2,465  in CompX International on January 14, 2025 and sell it today you would lose (459.00) from holding CompX International or give up 18.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CompX International  vs.  TrueBlue

CompX International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TrueBlue

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueBlue has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CompX International and TrueBlue

The main advantage of trading using opposite CompX International and TrueBlue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, TrueBlue 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 TrueBlue will offset losses from the drop in TrueBlue's long position.

The idea behind CompX International and TrueBlue pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.