Correlation Between Advantage Solutions and Benton Resources
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Benton Resources 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 Advantage Solutions and Benton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and Benton Resources, you can compare the effects of market volatilities on Advantage Solutions and Benton Resources 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 Advantage Solutions with a short position of Benton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Benton Resources.
Diversification Opportunities for Advantage Solutions and Benton Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantage and Benton is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Benton Resources go up and down completely randomly.
Pair Corralation between Advantage Solutions and Benton Resources
Assuming the 90 days horizon Advantage Solutions is expected to generate 1.91 times less return on investment than Benton Resources. But when comparing it to its historical volatility, Advantage Solutions is 1.2 times less risky than Benton Resources. It trades about 0.06 of its potential returns per unit of risk. Benton Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Benton Resources on September 12, 2024 and sell it today you would lose (2.33) from holding Benton Resources or give up 29.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.3% |
| Values | Daily Returns |
Advantage Solutions vs. Benton Resources
Performance |
| Timeline |
| Advantage Solutions |
| Benton Resources |
Advantage Solutions and Benton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Solutions and Benton Resources
The main advantage of trading using opposite Advantage Solutions and Benton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, Benton Resources 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 Benton Resources will offset losses from the drop in Benton Resources' long position.| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream | Advantage Solutions vs. HUMANA INC |
| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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