Correlation Between Advantage Solutions and Bridgetown Holdings

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

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

Diversification Opportunities for Advantage Solutions and Bridgetown Holdings

-0.37

Correlation Coefficient

Advantage Solutions  Bridgetown Holdings

Very good diversification

The 3 months correlation between Advantage and Bridgetown is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings 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 Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Bridgetown Holdings go up and down completely randomly.

Pair Corralation between Advantage Solutions and Bridgetown Holdings

If you would invest  2.78  in Advantage Solutions on October 9, 2024 and sell it today you would lose (1.28) from holding Advantage Solutions or give up 46.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Advantage Solutions  vs.  Bridgetown Holdings

Advantage Solutions

Risk-Adjusted Performance

0 of 100

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 fairly abnormal basic indicators, Advantage Solutions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bridgetown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgetown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bridgetown Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Advantage Solutions and Bridgetown Holdings

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

The idea behind Advantage Solutions and Bridgetown Holdings 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.