Correlation Between Advantage Solutions and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and Dow Jones Industrial, you can compare the effects of market volatilities on Advantage Solutions and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Dow Jones.
Diversification Opportunities for Advantage Solutions and Dow Jones
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantage and Dow is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Dow Jones go up and down completely randomly.
Pair Corralation between Advantage Solutions and Dow Jones
Assuming the 90 days horizon Advantage Solutions is expected to generate 25.3 times more return on investment than Dow Jones. However, Advantage Solutions is 25.3 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 13.00 in Advantage Solutions on November 1, 2024 and sell it today you would lose (11.40) from holding Advantage Solutions or give up 87.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.53% |
| Values | Daily Returns |
Advantage Solutions vs. Dow Jones Industrial
Performance |
| Timeline |
Advantage Solutions and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Advantage Solutions
Pair trading matchups for Advantage Solutions
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Advantage Solutions and Dow Jones
The main advantage of trading using opposite Advantage Solutions and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream |
| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
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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