Correlation Between Advantage Solutions and New Age
Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and New Age 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 New Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and New Age Metals, you can compare the effects of market volatilities on Advantage Solutions and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and New Age.
Diversification Opportunities for Advantage Solutions and New Age
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advantage and New is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and New Age go up and down completely randomly.
Pair Corralation between Advantage Solutions and New Age
Assuming the 90 days horizon Advantage Solutions is expected to under-perform the New Age. In addition to that, Advantage Solutions is 1.51 times more volatile than New Age Metals. It trades about -0.08 of its total potential returns per unit of risk. New Age Metals is currently generating about -0.05 per unit of volatility. If you would invest 7.59 in New Age Metals on October 26, 2024 and sell it today you would lose (2.02) from holding New Age Metals or give up 26.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Advantage Solutions vs. New Age Metals
Performance |
| Timeline |
| Advantage Solutions |
| New Age Metals |
Advantage Solutions and New Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantage Solutions and New Age
The main advantage of trading using opposite Advantage Solutions and New Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, New Age 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 New Age will offset losses from the drop in New Age's long position.| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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