Correlation Between Advantage Solutions and Bonterra Resources
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Bonterra 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 Bonterra 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 Bonterra Resources, you can compare the effects of market volatilities on Advantage Solutions and Bonterra 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 Bonterra Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Bonterra Resources.
Diversification Opportunities for Advantage Solutions and Bonterra Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantage and Bonterra is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Bonterra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonterra 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 Bonterra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonterra Resources has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Bonterra Resources go up and down completely randomly.
Pair Corralation between Advantage Solutions and Bonterra Resources
Assuming the 90 days horizon Advantage Solutions is expected to generate 3.56 times more return on investment than Bonterra Resources. However, Advantage Solutions is 3.56 times more volatile than Bonterra Resources. It trades about 0.06 of its potential returns per unit of risk. Bonterra Resources is currently generating about 0.05 per unit of risk. If you would invest 11.00 in Advantage Solutions on September 4, 2024 and sell it today you would lose (9.00) from holding Advantage Solutions or give up 81.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.86% |
| Values | Daily Returns |
Advantage Solutions vs. Bonterra Resources
Performance |
| Timeline |
| Advantage Solutions |
| Bonterra Resources |
Advantage Solutions and Bonterra Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Solutions and Bonterra Resources
The main advantage of trading using opposite Advantage Solutions and Bonterra Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, Bonterra 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 Bonterra Resources will offset losses from the drop in Bonterra Resources' long position.| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream |
| Bonterra Resources vs. Advantage Solutions | Bonterra Resources vs. Atlas Corp | Bonterra Resources vs. PureCycle Technologies | Bonterra Resources vs. WM Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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