Correlation Between Compass Diversified and MFS Charter

Can any of the company-specific risk be diversified away by investing in both Compass Diversified and MFS Charter 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 MFS Charter 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 MFS Charter Income, you can compare the effects of market volatilities on Compass Diversified and MFS Charter 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 MFS Charter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and MFS Charter.

Diversification Opportunities for Compass Diversified and MFS Charter

0.14

Correlation Coefficient

Compass Diversified  MFS Charter

Average diversification

The 3 months correlation between Compass and MFS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter Income 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 MFS Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Compass Diversified i.e., Compass Diversified and MFS Charter go up and down completely randomly.

Pair Corralation between Compass Diversified and MFS Charter

Given the investment horizon of 90 days Compass Diversified Holdings is expected to under-perform the MFS Charter. In addition to that, Compass Diversified is 11.64 times more volatile than MFS Charter Income. It trades about -0.04 of its total potential returns per unit of risk. MFS Charter Income is currently generating about 0.16 per unit of volatility. If you would invest  619.00  in MFS Charter Income on May 13, 2025 and sell it today you would earn a total of  19.00  from holding MFS Charter Income or generate 3.07% return on investment over 90 days.

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

Compass Diversified Holdings  vs.  MFS Charter Income

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 latest fragile performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

MFS Charter Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, MFS Charter is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compass Diversified and MFS Charter

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

The idea behind Compass Diversified Holdings and MFS Charter Income 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.