Compass Diversified Holdings Stock Volatility

CODI Stock  USD 23.96  0.08  0.33%   
We consider Compass Diversified very steady. Compass Diversified secures Sharpe Ratio (or Efficiency) of 0.095, which signifies that the company had a 0.095% return per unit of risk over the last 3 months. We have found thirty technical indicators for Compass Diversified Holdings, which you can use to evaluate the volatility of the firm. Please confirm Compass Diversified's Risk Adjusted Performance of 0.0644, mean deviation of 1.24, and Downside Deviation of 1.37 to double-check if the risk estimate we provide is consistent with the expected return of 0.15%. Key indicators related to Compass Diversified's volatility include:
420 Days Market Risk
Chance Of Distress
420 Days Economic Sensitivity
Compass Diversified Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Compass daily returns, and it is calculated using variance and standard deviation. We also use Compass's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Compass Diversified volatility.
  
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as Compass Diversified can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of Compass Diversified at lower prices. For example, an investor can purchase Compass stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Compass Diversified's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.

Moving together with Compass Stock

  0.66V Visa Class A Sell-off TrendPairCorr
  0.81MCAA Mountain I AcquisitionPairCorr
  0.69MCAC Monterey Capital Acq Report 18th of April 2024 PairCorr

Moving against Compass Stock

  0.44DHIL Diamond Hill InvestmentPairCorr

Compass Diversified Market Sensitivity And Downside Risk

Compass Diversified's beta coefficient measures the volatility of Compass stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Compass stock's returns against your selected market. In other words, Compass Diversified's beta of 1.81 provides an investor with an approximation of how much risk Compass Diversified stock can potentially add to one of your existing portfolios. Compass Diversified Holdings has relatively low volatility with skewness of 0.33 and kurtosis of 0.65. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Compass Diversified's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Compass Diversified's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze Compass Diversified Demand Trend
Check current 90 days Compass Diversified correlation with market (NYSE Composite)

Compass Beta

    
  1.81  
Compass standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  1.59  
It is essential to understand the difference between upside risk (as represented by Compass Diversified's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Compass Diversified's daily returns or price. Since the actual investment returns on holding a position in compass stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Compass Diversified.

Using Compass Put Option to Manage Risk

Put options written on Compass Diversified grant holders of the option the right to sell a specified amount of Compass Diversified at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of Compass Stock cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge Compass Diversified's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding Compass Diversified will be realized, the loss incurred will be offset by the profits made with the option trade.

Compass Diversified's PUT expiring on 2024-04-19

   Profit   
       Compass Diversified Price At Expiration  

Current Compass Diversified Insurance Chain

DeltaGammaOpen IntExpirationCurrent SpreadLast Price
Put
2024-04-19 PUT at $22.5-0.17490.143622024-04-190.05 - 0.30.3View
View All Compass Diversified Options

Compass Diversified Stock Volatility Analysis

Volatility refers to the frequency at which Compass Diversified stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Compass Diversified's price changes. Investors will then calculate the volatility of Compass Diversified's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Compass Diversified's volatility:

Historical Volatility

This type of stock volatility measures Compass Diversified's fluctuations based on previous trends. It's commonly used to predict Compass Diversified's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for Compass Diversified's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Compass Diversified's to be redeemed at a future date.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. Compass Diversified Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.

Compass Diversified Projected Return Density Against Market

Given the investment horizon of 90 days the stock has the beta coefficient of 1.8114 suggesting as the benchmark fluctuates upward, the company is expected to outperform it on average. However, if the benchmark returns are projected to be negative, Compass Diversified will likely underperform.
Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Compass Diversified or Financial Services sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Compass Diversified's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Compass stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Compass Diversified Holdings has a negative alpha, implying that the risk taken by holding this instrument is not justified. The company is significantly underperforming NYSE Composite.
   Predicted Return Density   
       Returns  
Compass Diversified's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how compass stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a Compass Diversified Price Volatility?

Several factors can influence a stock's market volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

Compass Diversified Stock Risk Measures

Given the investment horizon of 90 days the coefficient of variation of Compass Diversified is 1052.4. The daily returns are distributed with a variance of 2.52 and standard deviation of 1.59. The mean deviation of Compass Diversified Holdings is currently at 1.24. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.56
α
Alpha over NYSE Composite
-0.07
β
Beta against NYSE Composite1.81
σ
Overall volatility
1.59
Ir
Information ratio 0.02

Compass Diversified Stock Return Volatility

Compass Diversified historical daily return volatility represents how much of Compass Diversified stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm inherits 1.589% risk (volatility on return distribution) over the 90 days horizon. By contrast, NYSE Composite accepts 0.5731% volatility on return distribution over the 90 days horizon.
 Performance 
       Timeline  

About Compass Diversified Volatility

Volatility is a rate at which the price of Compass Diversified or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Compass Diversified may increase or decrease. In other words, similar to Compass's beta indicator, it measures the risk of Compass Diversified and helps estimate the fluctuations that may happen in a short period of time. So if prices of Compass Diversified fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.
Compass Diversified is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage and middle market investments. Compass Diversified was founded in 2005 and is based in Westport, Connecticut with an additional office in Costa Mesa, California. Compass Diversified operates under Conglomerates classification in the United States and is traded on New York Stock Exchange. It employs 68 people.
Compass Diversified's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on Compass Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much Compass Diversified's price varies over time.

3 ways to utilize Compass Diversified's volatility to invest better

Higher Compass Diversified's stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of Compass Diversified stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. Compass Diversified stock volatility can provide helpful information for making investment decisions in the following ways:
  • Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of Compass Diversified investment. A higher volatility means higher risk and potentially larger changes in value.
  • Identifying Opportunities: High volatility in Compass Diversified's stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
  • Diversification: Understanding how the volatility of Compass Diversified's stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
Remember it's essential to remember that stock volatility is just one of many factors to consider when making investment decisions, and it should be used in conjunction with other fundamental and technical analysis tools.

Compass Diversified Investment Opportunity

Compass Diversified Holdings has a volatility of 1.59 and is 2.79 times more volatile than NYSE Composite. 14 percent of all equities and portfolios are less risky than Compass Diversified. You can use Compass Diversified Holdings to protect your portfolios against small market fluctuations. The stock experiences a normal downward trend and little activity. Check odds of Compass Diversified to be traded at $23.72 in 90 days.

Poor diversification

The correlation between Compass Diversified Holdings and NYA is 0.64 (i.e., Poor diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and NYA in the same portfolio, assuming nothing else is changed.

Compass Diversified Additional Risk Indicators

The analysis of Compass Diversified's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Compass Diversified's investment and either accepting that risk or mitigating it. Along with some common measures of Compass Diversified stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Compass Diversified Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Compass Diversified as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Compass Diversified's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Compass Diversified's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Compass Diversified Holdings.
When determining whether Compass Diversified offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Compass Diversified's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Compass Diversified Holdings Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Compass Diversified Holdings Stock:
Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in Compass Diversified Holdings. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in unemployment.
Note that the Compass Diversified information on this page should be used as a complementary analysis to other Compass Diversified's statistical models used 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

Complementary Tools for Compass Stock analysis

When running Compass Diversified's price analysis, check to measure Compass Diversified's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Compass Diversified is operating at the current time. Most of Compass Diversified's value examination focuses on studying past and present price action to predict the probability of Compass Diversified's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Compass Diversified's price. Additionally, you may evaluate how the addition of Compass Diversified to your portfolios can decrease your overall portfolio volatility.
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Is Compass Diversified's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Compass Diversified. If investors know Compass will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Compass Diversified listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.13)
Dividend Share
1
Earnings Share
(1.71)
Revenue Per Share
28.554
Quarterly Revenue Growth
0.039
The market value of Compass Diversified is measured differently than its book value, which is the value of Compass that is recorded on the company's balance sheet. Investors also form their own opinion of Compass Diversified's value that differs from its market value or its book value, called intrinsic value, which is Compass Diversified's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Compass Diversified's market value can be influenced by many factors that don't directly affect Compass Diversified's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Compass Diversified's value and its price as these two are different measures arrived at by different means. Investors typically determine if Compass Diversified is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Compass Diversified's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.