Correlation Between First Advantage and Entergy New
Can any of the company-specific risk be diversified away by investing in both First Advantage and Entergy New 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 Entergy New 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 Entergy New Orleans, you can compare the effects of market volatilities on First Advantage and Entergy New 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 Entergy New. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Entergy New.
Diversification Opportunities for First Advantage and Entergy New
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Entergy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans 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 Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of First Advantage i.e., First Advantage and Entergy New go up and down completely randomly.
Pair Corralation between First Advantage and Entergy New
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 2.86 times more return on investment than Entergy New. However, First Advantage is 2.86 times more volatile than Entergy New Orleans. It trades about 0.23 of its potential returns per unit of risk. Entergy New Orleans is currently generating about -0.26 per unit of risk. If you would invest 1,754 in First Advantage Corp on August 27, 2024 and sell it today you would earn a total of 235.00 from holding First Advantage Corp or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Entergy New Orleans
Performance |
| Timeline |
| First Advantage Corp |
| Entergy New Orleans |
First Advantage and Entergy New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Entergy New
The main advantage of trading using opposite First Advantage and Entergy New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, Entergy New 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 Entergy New will offset losses from the drop in Entergy New'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 |
| Entergy New vs. Genpact Limited | Entergy New vs. Broadridge Financial Solutions | Entergy New vs. First Advantage Corp | Entergy New vs. Franklin Covey |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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