Correlation Between Compass Diversified and SIMON

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

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

Diversification Opportunities for Compass Diversified and SIMON

-0.05

Correlation Coefficient

Compass Diversified  SIMON

Good diversification

The 3 months correlation between Compass and SIMON is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and SIMON PROPERTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PROPERTY GROUP and Compass Diversified 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 Compass Diversified Holdings are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PROPERTY GROUP has no effect on the direction of Compass Diversified i.e., Compass Diversified and SIMON go up and down completely randomly.

Pair Corralation between Compass Diversified and SIMON

Assuming the 90 days trading horizon Compass Diversified Holdings is expected to generate 2.68 times more return on investment than SIMON. However, Compass Diversified is 2.68 times more volatile than SIMON PROPERTY GROUP. It trades about 0.01 of its potential returns per unit of risk. SIMON PROPERTY GROUP is currently generating about -0.03 per unit of risk. If you would invest  1,763  in Compass Diversified Holdings on July 8, 2025 and sell it today you would lose (20.00) from holding Compass Diversified Holdings or give up 1.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Compass Diversified Holdings  vs.  SIMON PROPERTY GROUP

Compass Diversified

Risk-Adjusted Performance

Weakest

Over the last 90 days Compass Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Compass Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SIMON PROPERTY GROUP

Risk-Adjusted Performance

Weakest

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compass Diversified and SIMON

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

The idea behind Compass Diversified Holdings and SIMON PROPERTY GROUP 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 Global Correlations module to find global opportunities by holding instruments from different markets.