Correlation Between RB Global and First Advantage
Can any of the company-specific risk be diversified away by investing in both RB Global and First Advantage 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 RB Global and First Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Global and First Advantage Corp, you can compare the effects of market volatilities on RB Global and First Advantage 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 RB Global with a short position of First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Global and First Advantage.
Diversification Opportunities for RB Global and First Advantage
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RBA and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage Corp and RB Global 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 RB Global are associated (or correlated) with First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of RB Global i.e., RB Global and First Advantage go up and down completely randomly.
Pair Corralation between RB Global and First Advantage
Considering the 90-day investment horizon RB Global is expected to generate 0.78 times more return on investment than First Advantage. However, RB Global is 1.27 times less risky than First Advantage. It trades about 0.16 of its potential returns per unit of risk. First Advantage Corp is currently generating about 0.05 per unit of risk. If you would invest 8,518 in RB Global on August 28, 2024 and sell it today you would earn a total of 1,332 from holding RB Global or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Global vs. First Advantage Corp
Performance |
| Timeline |
| RB Global |
| First Advantage Corp |
RB Global and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Global and First Advantage
The main advantage of trading using opposite RB Global and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Global position performs unexpectedly, First Advantage 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 First Advantage will offset losses from the drop in First Advantage's long position.The idea behind RB Global and First Advantage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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