Correlation Between Advantage Solutions and Marchex

Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Marchex 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 Advantage Solutions and Marchex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advantage Solutions and Marchex, you can compare the effects of market volatilities on Advantage Solutions and Marchex 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 Advantage Solutions with a short position of Marchex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Marchex.

Diversification Opportunities for Advantage Solutions and Marchex

0.44

Correlation Coefficient

Advantage Solutions  Marchex

Very weak diversification

The 3 months correlation between Advantage and Marchex is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Marchex go up and down completely randomly.

Pair Corralation between Advantage Solutions and Marchex

Considering the 90-day investment horizon Advantage Solutions is expected to under-perform the Marchex. In addition to that, Advantage Solutions is 1.68 times more volatile than Marchex. It trades about -0.18 of its total potential returns per unit of risk. Marchex is currently generating about -0.03 per unit of volatility. If you would invest  181.00  in Marchex on December 29, 2024 and sell it today you would lose (13.00) from holding Marchex or give up 7.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Advantage Solutions  vs.  Marchex

Advantage Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advantage Solutions and Marchex

The main advantage of trading using opposite Advantage Solutions and Marchex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, Marchex 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 Marchex will offset losses from the drop in Marchex's long position.

The idea behind Advantage Solutions and Marchex 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.