Correlation Between CompX International and Brinks
Can any of the company-specific risk be diversified away by investing in both CompX International and Brinks 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 CompX International and Brinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and Brinks Company, you can compare the effects of market volatilities on CompX International and Brinks 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 CompX International with a short position of Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Brinks.
Diversification Opportunities for CompX International and Brinks
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CompX and Brinks is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company and CompX International 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 CompX International are associated (or correlated) with Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of CompX International i.e., CompX International and Brinks go up and down completely randomly.
Pair Corralation between CompX International and Brinks
Considering the 90-day investment horizon CompX International is expected to generate 1.91 times more return on investment than Brinks. However, CompX International is 1.91 times more volatile than Brinks Company. It trades about 0.05 of its potential returns per unit of risk. Brinks Company is currently generating about 0.06 per unit of risk. If you would invest 1,858 in CompX International on January 26, 2024 and sell it today you would earn a total of 1,369 from holding CompX International or generate 73.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
CompX International vs. Brinks Company
Performance |
| Timeline |
| CompX International |
| Brinks Company |
CompX International and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and Brinks
The main advantage of trading using opposite CompX International and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
| Brinks vs. MSA Safety | Brinks vs. Resideo Technologies | Brinks vs. Mistras Group | Brinks vs. NL Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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