Correlation Between Advantage Solutions and Eos Energy

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

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

Diversification Opportunities for Advantage Solutions and Eos Energy

-0.69

Correlation Coefficient

Advantage Solutions  Eos Energy

Excellent diversification

The 3 months correlation between Advantage and Eos is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Eos Energy go up and down completely randomly.

Pair Corralation between Advantage Solutions and Eos Energy

Assuming the 90 days horizon Advantage Solutions is expected to generate 1.42 times less return on investment than Eos Energy. In addition to that, Advantage Solutions is 1.33 times more volatile than Eos Energy Enterprises. It trades about 0.04 of its total potential returns per unit of risk. Eos Energy Enterprises is currently generating about 0.08 per unit of volatility. If you would invest  31.00  in Eos Energy Enterprises on October 24, 2024 and sell it today you would earn a total of  89.00  from holding Eos Energy Enterprises or generate 287.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	78.14%
Values	Daily Returns

Advantage Solutions  vs.  Eos Energy Enterprises

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 stable basic indicators, Advantage Solutions is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eos Energy Enterprises

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Eos Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and Eos Energy

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

The idea behind Advantage Solutions and Eos Energy Enterprises 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.