Correlation Between Advantage Solutions and CMC Metals
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and CMC Metals 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 CMC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and CMC Metals, you can compare the effects of market volatilities on Advantage Solutions and CMC Metals 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 CMC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and CMC Metals.
Diversification Opportunities for Advantage Solutions and CMC Metals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantage and CMC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals 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 CMC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Metals has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and CMC Metals go up and down completely randomly.
Pair Corralation between Advantage Solutions and CMC Metals
Assuming the 90 days horizon Advantage Solutions is expected to under-perform the CMC Metals. But the stock apears to be less risky and, when comparing its historical volatility, Advantage Solutions is 4.24 times less risky than CMC Metals. The stock trades about -0.12 of its potential returns per unit of risk. The CMC Metals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2.00 in CMC Metals on September 13, 2024 and sell it today you would lose (0.24) from holding CMC Metals or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Advantage Solutions vs. CMC Metals
Performance |
| Timeline |
| Advantage Solutions |
| CMC Metals |
Advantage Solutions and CMC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Solutions and CMC Metals
The main advantage of trading using opposite Advantage Solutions and CMC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, CMC Metals 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 CMC Metals will offset losses from the drop in CMC Metals' long position.| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream | Advantage Solutions vs. Aquagold International |
| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. AbraSilver Resource Corp | CMC Metals vs. Gatos Silver |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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