Correlation Between DigitalBridge and Compass

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

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

Diversification Opportunities for DigitalBridge and Compass

0.23

Correlation Coefficient

DigitalBridge  Compass

Modest diversification

The 3 months correlation between DigitalBridge and Compass is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and Compass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass and DigitalBridge 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 DigitalBridge Group 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 DigitalBridge i.e., DigitalBridge and Compass go up and down completely randomly.

Pair Corralation between DigitalBridge and Compass

Assuming the 90 days trading horizon DigitalBridge is expected to generate 10.45 times less return on investment than Compass. But when comparing it to its historical volatility, DigitalBridge Group is 2.87 times less risky than Compass. It trades about 0.05 of its potential returns per unit of risk. Compass is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  792.00  in Compass on September 21, 2025 and sell it today you would earn a total of  266.00  from holding Compass or generate 33.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

DigitalBridge Group  vs.  Compass

DigitalBridge Group

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalBridge Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, DigitalBridge is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Compass

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compass are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Compass reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DigitalBridge and Compass

The main advantage of trading using opposite DigitalBridge and Compass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigitalBridge 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 DigitalBridge Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.