Correlation Between CompoSecure and SPS Commerce
Can any of the company-specific risk be diversified away by investing in both CompoSecure and SPS Commerce 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 CompoSecure and SPS Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompoSecure and SPS Commerce, you can compare the effects of market volatilities on CompoSecure and SPS Commerce 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 CompoSecure with a short position of SPS Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and SPS Commerce.
Diversification Opportunities for CompoSecure and SPS Commerce
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CompoSecure and SPS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce and CompoSecure 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 CompoSecure are associated (or correlated) with SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of CompoSecure i.e., CompoSecure and SPS Commerce go up and down completely randomly.
Pair Corralation between CompoSecure and SPS Commerce
Assuming the 90 days horizon CompoSecure is expected to generate 1.54 times more return on investment than SPS Commerce. However, CompoSecure is 1.54 times more volatile than SPS Commerce. It trades about 0.29 of its potential returns per unit of risk. SPS Commerce is currently generating about -0.01 per unit of risk. If you would invest 380.00 in CompoSecure on April 30, 2025 and sell it today you would earn a total of 270.00 from holding CompoSecure or generate 71.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompoSecure vs. SPS Commerce
Performance |
| Timeline |
| CompoSecure |
| SPS Commerce |
CompoSecure and SPS Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompoSecure and SPS Commerce
The main advantage of trading using opposite CompoSecure and SPS Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, SPS Commerce 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 SPS Commerce will offset losses from the drop in SPS Commerce's long position.The idea behind CompoSecure and SPS Commerce 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.| SPS Commerce vs. Qualys Inc | SPS Commerce vs. NetScout Systems | SPS Commerce vs. Evertec | SPS Commerce vs. CSG Systems International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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