Correlation Between Critical Metals and Compass Diversified

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

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

Diversification Opportunities for Critical Metals and Compass Diversified

0.73

Correlation Coefficient

Critical Metals  Compass Diversified

Poor diversification

The 3 months correlation between Critical and Compass is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Critical Metals Corp and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Critical Metals 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 Critical Metals Corp are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Critical Metals i.e., Critical Metals and Compass Diversified go up and down completely randomly.

Pair Corralation between Critical Metals and Compass Diversified

Given the investment horizon of 90 days Critical Metals Corp is expected to generate 3.58 times more return on investment than Compass Diversified. However, Critical Metals is 3.58 times more volatile than Compass Diversified Holdings. It trades about 0.24 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about 0.17 per unit of risk. If you would invest  145.00  in Critical Metals Corp on May 18, 2025 and sell it today you would earn a total of  439.00  from holding Critical Metals Corp or generate 302.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Critical Metals Corp  vs.  Compass Diversified Holdings

Critical Metals Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Compass Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Compass Diversified sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Metals and Compass Diversified

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

The idea behind Critical Metals Corp and Compass Diversified Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.