Correlation Between First Advantage and Argan
Can any of the company-specific risk be diversified away by investing in both First Advantage and Argan 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 First Advantage and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Advantage Corp and Argan Inc, you can compare the effects of market volatilities on First Advantage and Argan 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 First Advantage with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Argan.
Diversification Opportunities for First Advantage and Argan
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Argan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and First Advantage 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 First Advantage Corp are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of First Advantage i.e., First Advantage and Argan go up and down completely randomly.
Pair Corralation between First Advantage and Argan
Allowing for the 90-day total investment horizon First Advantage is expected to generate 4.33 times less return on investment than Argan. But when comparing it to its historical volatility, First Advantage Corp is 1.87 times less risky than Argan. It trades about 0.07 of its potential returns per unit of risk. Argan Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,997 in Argan Inc on August 27, 2024 and sell it today you would earn a total of 11,866 from holding Argan Inc or generate 296.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Argan Inc
Performance |
| Timeline |
| First Advantage Corp |
| Argan Inc |
First Advantage and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Argan
The main advantage of trading using opposite First Advantage and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| First Advantage vs. Discount Print USA | First Advantage vs. Cass Information Systems | First Advantage vs. Civeo Corp | First Advantage vs. Network 1 Technologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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