Correlation Between First Advantage and VSE
Can any of the company-specific risk be diversified away by investing in both First Advantage and VSE 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 VSE 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 VSE Corporation, you can compare the effects of market volatilities on First Advantage and VSE 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 VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and VSE.
Diversification Opportunities for First Advantage and VSE
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and VSE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation 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 VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of First Advantage i.e., First Advantage and VSE go up and down completely randomly.
Pair Corralation between First Advantage and VSE
Allowing for the 90-day total investment horizon First Advantage is expected to generate 3.09 times less return on investment than VSE. But when comparing it to its historical volatility, First Advantage Corp is 1.55 times less risky than VSE. It trades about 0.06 of its potential returns per unit of risk. VSE Corporation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,013 in VSE Corporation on August 26, 2024 and sell it today you would earn a total of 5,685 from holding VSE Corporation or generate 94.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. VSE Corp.
Performance |
| Timeline |
| First Advantage Corp |
| VSE Corporation |
First Advantage and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and VSE
The main advantage of trading using opposite First Advantage and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, VSE 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 VSE will offset losses from the drop in VSE's long position.| First Advantage vs. ExlService Holdings | First Advantage vs. WNS Holdings | First Advantage vs. Gartner | First Advantage vs. The Hackett Group |
| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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