Correlation Between CMC Metals and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both CMC Metals 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 CMC Metals and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Advantage Solutions, you can compare the effects of market volatilities on CMC Metals 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 CMC Metals with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Advantage Solutions.
Diversification Opportunities for CMC Metals and Advantage Solutions
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CMC and Advantage is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and CMC Metals 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 CMC Metals 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 CMC Metals i.e., CMC Metals and Advantage Solutions go up and down completely randomly.
Pair Corralation between CMC Metals and Advantage Solutions
Assuming the 90 days horizon CMC Metals is expected to generate 1.29 times more return on investment than Advantage Solutions. However, CMC Metals is 1.29 times more volatile than Advantage Solutions. It trades about 0.08 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.05 per unit of risk. If you would invest 11.00 in CMC Metals on September 12, 2024 and sell it today you would lose (9.70) from holding CMC Metals or give up 88.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 74.43% |
| Values | Daily Returns |
CMC Metals vs. Advantage Solutions
Performance |
| Timeline |
| CMC Metals |
| Advantage Solutions |
CMC Metals and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Advantage Solutions
The main advantage of trading using opposite CMC Metals and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals 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.| CMC Metals vs. Advantage Solutions | CMC Metals vs. Atlas Corp | CMC Metals vs. PureCycle Technologies | CMC Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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