Correlation Between Compass Diversified and Xp

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

Diversification Opportunities for Compass Diversified and Xp

-0.11

Correlation Coefficient

Compass Diversified  Xp

Good diversification

The 3 months correlation between Compass and Xp is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Compass Diversified i.e., Compass Diversified and Xp go up and down completely randomly.

Pair Corralation between Compass Diversified and Xp

Given the investment horizon of 90 days Compass Diversified Holdings is expected to generate 1.25 times more return on investment than Xp. However, Compass Diversified is 1.25 times more volatile than Xp Inc. It trades about 0.01 of its potential returns per unit of risk. Xp Inc is currently generating about -0.02 per unit of risk. If you would invest  662.00  in Compass Diversified Holdings on July 3, 2025 and sell it today you would earn a total of  0.00  from holding Compass Diversified Holdings or generate 0.0% return on investment over 90 days.

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

Compass Diversified Holdings  vs.  Xp Inc

Compass Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Compass Diversified is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Xp Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Xp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compass Diversified and Xp

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

The idea behind Compass Diversified Holdings and Xp Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.