Correlation Between First Advantage and Insperity
Can any of the company-specific risk be diversified away by investing in both First Advantage and Insperity 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 Insperity 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 Insperity, you can compare the effects of market volatilities on First Advantage and Insperity 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 Insperity. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Insperity.
Diversification Opportunities for First Advantage and Insperity
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Insperity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity 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 Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of First Advantage i.e., First Advantage and Insperity go up and down completely randomly.
Pair Corralation between First Advantage and Insperity
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 0.79 times more return on investment than Insperity. However, First Advantage Corp is 1.27 times less risky than Insperity. It trades about 0.21 of its potential returns per unit of risk. Insperity is currently generating about 0.02 per unit of risk. If you would invest 1,754 in First Advantage Corp on August 28, 2024 and sell it today you would earn a total of 219.00 from holding First Advantage Corp or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Insperity
Performance |
| Timeline |
| First Advantage Corp |
| Insperity |
First Advantage and Insperity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Insperity
The main advantage of trading using opposite First Advantage and Insperity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, Insperity 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 Insperity will offset losses from the drop in Insperity's long position.| First Advantage vs. ExlService Holdings | First Advantage vs. WNS Holdings | First Advantage vs. Gartner | First Advantage vs. The Hackett Group |
| Insperity vs. Korn Ferry | Insperity vs. Barrett Business Services | Insperity vs. TrueBlue | Insperity vs. Heidrick Struggles International |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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