Correlation Between All American and First Advantage
Can any of the company-specific risk be diversified away by investing in both All American and First Advantage 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 All American and First Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All American Pet and First Advantage Corp, you can compare the effects of market volatilities on All American and First Advantage 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 All American with a short position of First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and First Advantage.
Diversification Opportunities for All American and First Advantage
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between All and First is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage Corp and All American 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 All American Pet are associated (or correlated) with First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of All American i.e., All American and First Advantage go up and down completely randomly.
Pair Corralation between All American and First Advantage
If you would invest 1,843 in First Advantage Corp on November 3, 2024 and sell it today you would earn a total of 45.00 from holding First Advantage Corp or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
All American Pet vs. First Advantage Corp
Performance |
| Timeline |
| All American Pet |
| First Advantage Corp |
All American and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All American and First Advantage
The main advantage of trading using opposite All American and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, First Advantage 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 First Advantage will offset losses from the drop in First Advantage's long position.| All American vs. International Consolidated Companies | All American vs. Frontera Group | All American vs. XCPCNL Business Services | All American vs. Aramark Holdings |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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