Correlation Between DLH Holdings and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both DLH Holdings 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 DLH Holdings and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DLH Holdings Corp and Advantage Solutions, you can compare the effects of market volatilities on DLH Holdings 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 DLH Holdings with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of DLH Holdings and Advantage Solutions.
Diversification Opportunities for DLH Holdings and Advantage Solutions
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DLH and Advantage is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and DLH Holdings 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 DLH Holdings Corp 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 DLH Holdings i.e., DLH Holdings and Advantage Solutions go up and down completely randomly.
Pair Corralation between DLH Holdings and Advantage Solutions
Given the investment horizon of 90 days DLH Holdings is expected to generate 4.29 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, DLH Holdings Corp is 3.64 times less risky than Advantage Solutions. It trades about 0.09 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.64 in Advantage Solutions on August 31, 2024 and sell it today you would earn a total of 0.30 from holding Advantage Solutions or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
DLH Holdings Corp vs. Advantage Solutions
Performance |
| Timeline |
| DLH Holdings Corp |
| Advantage Solutions |
DLH Holdings and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DLH Holdings and Advantage Solutions
The main advantage of trading using opposite DLH Holdings and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DLH Holdings 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.| DLH Holdings vs. Network 1 Technologies | DLH Holdings vs. Wilhelmina | DLH Holdings vs. Mader Group Limited | DLH Holdings vs. First Advantage Corp |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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