Correlation Between CompoSecure and Tredegar

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

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

Diversification Opportunities for CompoSecure and Tredegar

-0.81

Correlation Coefficient

CompoSecure  Tredegar

Pay attention - limited upside

The 3 months correlation between CompoSecure and Tredegar is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Tredegar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tredegar and CompoSecure 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 CompoSecure are associated (or correlated) with Tredegar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tredegar has no effect on the direction of CompoSecure i.e., CompoSecure and Tredegar go up and down completely randomly.

Pair Corralation between CompoSecure and Tredegar

Given the investment horizon of 90 days CompoSecure is expected to generate 1.45 times more return on investment than Tredegar. However, CompoSecure is 1.45 times more volatile than Tredegar. It trades about 0.2 of its potential returns per unit of risk. Tredegar is currently generating about -0.05 per unit of risk. If you would invest  1,409  in CompoSecure on June 28, 2025 and sell it today you would earn a total of  661.00  from holding CompoSecure or generate 46.91% return on investment over 90 days.

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

CompoSecure  vs.  Tredegar

CompoSecure

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CompoSecure displayed solid returns over the last few months and may actually be approaching a breakup point.

Tredegar

Risk-Adjusted Performance

Weakest

Over the last 90 days Tredegar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CompoSecure and Tredegar

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

The idea behind CompoSecure and Tredegar 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.

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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..