Correlation Between Dycom Industries and CompoSecure

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

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

Diversification Opportunities for Dycom Industries and CompoSecure

0.97

Correlation Coefficient

Dycom Industries  CompoSecure

Almost no diversification

The 3 months correlation between Dycom and CompoSecure is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Dycom Industries 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 Dycom Industries are associated (or correlated) with CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Dycom Industries i.e., Dycom Industries and CompoSecure go up and down completely randomly.

Pair Corralation between Dycom Industries and CompoSecure

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 1.26 times more return on investment than CompoSecure. However, Dycom Industries is 1.26 times more volatile than CompoSecure. It trades about 0.33 of its potential returns per unit of risk. CompoSecure is currently generating about 0.25 per unit of risk. If you would invest  16,696  in Dycom Industries on April 27, 2025 and sell it today you would earn a total of  9,773  from holding Dycom Industries or generate 58.53% return on investment over 90 days.

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

Dycom Industries  vs.  CompoSecure

Dycom Industries

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dycom Industries are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Dycom Industries showed solid returns over the last few months and may actually be approaching a breakup point.

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 19 (%) 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.

Pair Trading with Dycom Industries and CompoSecure

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

The idea behind Dycom Industries and CompoSecure 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.