Correlation Between SP Plus and First Advantage
Can any of the company-specific risk be diversified away by investing in both SP Plus 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 SP Plus and First Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Plus Corp and First Advantage Corp, you can compare the effects of market volatilities on SP Plus 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 SP Plus with a short position of First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Plus and First Advantage.
Diversification Opportunities for SP Plus and First Advantage
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SP Plus and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SP Plus Corp 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 SP Plus 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 SP Plus Corp 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 SP Plus i.e., SP Plus and First Advantage go up and down completely randomly.
Pair Corralation between SP Plus and First Advantage
Allowing for the 90-day total investment horizon SP Plus is expected to generate 1.41 times less return on investment than First Advantage. In addition to that, SP Plus is 1.01 times more volatile than First Advantage Corp. It trades about 0.04 of its total potential returns per unit of risk. First Advantage Corp is currently generating about 0.06 per unit of volatility. If you would invest 1,180 in First Advantage Corp on August 24, 2024 and sell it today you would earn a total of 730.00 from holding First Advantage Corp or generate 61.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.06% |
| Values | Daily Returns |
SP Plus Corp vs. First Advantage Corp
Performance |
| Timeline |
| SP Plus Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Advantage Corp |
SP Plus and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Plus and First Advantage
The main advantage of trading using opposite SP Plus and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Plus 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.| SP Plus vs. Cass Information Systems | SP Plus vs. First Advantage Corp | SP Plus vs. Rentokil Initial PLC | SP Plus vs. CBIZ Inc |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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