Correlation Between Global Business and Compass

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

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

Diversification Opportunities for Global Business and Compass

0.44

Correlation Coefficient

Global Business  Compass

Very weak diversification

The 3 months correlation between Global and Compass is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Compass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass and Global Business 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 Global Business Travel are associated (or correlated) with Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass has no effect on the direction of Global Business i.e., Global Business and Compass go up and down completely randomly.

Pair Corralation between Global Business and Compass

Given the investment horizon of 90 days Global Business is expected to generate 1.09 times less return on investment than Compass. But when comparing it to its historical volatility, Global Business Travel is 1.95 times less risky than Compass. It trades about 0.09 of its potential returns per unit of risk. Compass is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  821.00  in Compass on August 7, 2025 and sell it today you would earn a total of  58.00  from holding Compass or generate 7.06% return on investment over 90 days.

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

Global Business Travel  vs.  Compass

Global Business Travel

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Global Business Travel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Global Business may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Compass

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Compass are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Compass may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Global Business and Compass

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

The idea behind Global Business Travel and Compass 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.