Correlation Between Cascades and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both Cascades 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 Cascades and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cascades and Advantage Solutions, you can compare the effects of market volatilities on Cascades 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 Cascades with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cascades and Advantage Solutions.
Diversification Opportunities for Cascades and Advantage Solutions
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cascades and Advantage is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cascades and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and Cascades 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 Cascades 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 Cascades i.e., Cascades and Advantage Solutions go up and down completely randomly.
Pair Corralation between Cascades and Advantage Solutions
Assuming the 90 days horizon Cascades is expected to generate 0.13 times more return on investment than Advantage Solutions. However, Cascades is 7.93 times less risky than Advantage Solutions. It trades about 0.26 of its potential returns per unit of risk. Advantage Solutions is currently generating about -0.04 per unit of risk. If you would invest 805.00 in Cascades on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Cascades or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Cascades vs. Advantage Solutions
Performance |
| Timeline |
| Cascades |
| Advantage Solutions |
Cascades and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cascades and Advantage Solutions
The main advantage of trading using opposite Cascades and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cascades 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.| Cascades vs. Advantage Solutions | Cascades vs. Atlas Corp | Cascades vs. PureCycle Technologies | Cascades vs. WM Technology |
| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream | Advantage Solutions vs. HUMANA INC |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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