Correlation Between Belden and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both Belden and Advantage Solutions 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 Belden and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and Advantage Solutions, you can compare the effects of market volatilities on Belden and Advantage Solutions 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 Belden with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Advantage Solutions.
Diversification Opportunities for Belden and Advantage Solutions
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Belden and Advantage is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and Belden 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 Belden Inc are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Belden i.e., Belden and Advantage Solutions go up and down completely randomly.
Pair Corralation between Belden and Advantage Solutions
Considering the 90-day investment horizon Belden is expected to generate 2.54 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, Belden Inc is 1.47 times less risky than Advantage Solutions. It trades about 0.11 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Advantage Solutions on August 26, 2024 and sell it today you would earn a total of 50.00 from holding Advantage Solutions or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belden Inc vs. Advantage Solutions
Performance |
| Timeline |
| Belden Inc |
| Advantage Solutions |
Belden and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belden and Advantage Solutions
The main advantage of trading using opposite Belden and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' long position.The idea behind Belden Inc and Advantage Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Advantage Solutions vs. ADTRAN Inc | Advantage Solutions vs. Belden Inc | Advantage Solutions vs. ADC Therapeutics SA | Advantage Solutions vs. Comtech Telecommunications Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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