Correlation Between CompX International and Resideo Technologies
Can any of the company-specific risk be diversified away by investing in both CompX International and Resideo Technologies 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 Resideo Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and Resideo Technologies, you can compare the effects of market volatilities on CompX International and Resideo Technologies 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 Resideo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Resideo Technologies.
Diversification Opportunities for CompX International and Resideo Technologies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CompX and Resideo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Resideo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resideo Technologies 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 Resideo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resideo Technologies has no effect on the direction of CompX International i.e., CompX International and Resideo Technologies go up and down completely randomly.
Pair Corralation between CompX International and Resideo Technologies
Considering the 90-day investment horizon CompX International is expected to generate 2.65 times more return on investment than Resideo Technologies. However, CompX International is 2.65 times more volatile than Resideo Technologies. It trades about -0.13 of its potential returns per unit of risk. Resideo Technologies is currently generating about -0.53 per unit of risk. If you would invest 3,600 in CompX International on January 20, 2024 and sell it today you would lose (428.00) from holding CompX International or give up 11.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CompX International vs. Resideo Technologies
Performance |
| Timeline |
| CompX International |
| Resideo Technologies |
CompX International and Resideo Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and Resideo Technologies
The main advantage of trading using opposite CompX International and Resideo Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, Resideo Technologies 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 Resideo Technologies will offset losses from the drop in Resideo Technologies' long position.| CompX International vs. Avalon Holdings | CompX International vs. LanzaTech Global | CompX International vs. Ambipar Emergency Response | CompX International vs. Houston Natural Resources |
| Resideo Technologies vs. MSA Safety | Resideo Technologies vs. NL Industries | Resideo Technologies vs. Brady | Resideo Technologies vs. Brinks Company |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |