Correlation Between First Advantage and Interface
Can any of the company-specific risk be diversified away by investing in both First Advantage and Interface 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 Interface 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 Interface, you can compare the effects of market volatilities on First Advantage and Interface 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 Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Interface.
Diversification Opportunities for First Advantage and Interface
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Interface is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface 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 Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of First Advantage i.e., First Advantage and Interface go up and down completely randomly.
Pair Corralation between First Advantage and Interface
Allowing for the 90-day total investment horizon First Advantage is expected to generate 4.83 times less return on investment than Interface. But when comparing it to its historical volatility, First Advantage Corp is 2.8 times less risky than Interface. It trades about 0.14 of its potential returns per unit of risk. Interface is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,808 in Interface on August 26, 2024 and sell it today you would earn a total of 738.00 from holding Interface or generate 40.82% 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. Interface
Performance |
| Timeline |
| First Advantage Corp |
| Interface |
First Advantage and Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Interface
The main advantage of trading using opposite First Advantage and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, Interface 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 Interface will offset losses from the drop in Interface's long position.| First Advantage vs. ExlService Holdings | First Advantage vs. WNS Holdings | First Advantage vs. Gartner | First Advantage vs. The Hackett Group |
| Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface vs. Gibraltar Industries |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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