Correlation Between Advantage Solutions and Eskay Mining

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

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

Diversification Opportunities for Advantage Solutions and Eskay Mining

0.75

Correlation Coefficient

Advantage Solutions  Eskay Mining

Poor diversification

The 3 months correlation between Advantage and Eskay is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Eskay Mining go up and down completely randomly.

Pair Corralation between Advantage Solutions and Eskay Mining

Assuming the 90 days horizon Advantage Solutions is expected to generate 1.8 times less return on investment than Eskay Mining. In addition to that, Advantage Solutions is 1.59 times more volatile than Eskay Mining Corp. It trades about 0.04 of its total potential returns per unit of risk. Eskay Mining Corp is currently generating about 0.1 per unit of volatility. If you would invest  14.00  in Eskay Mining Corp on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Eskay Mining Corp or generate 35.71% return on investment over 90 days.

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

Advantage Solutions  vs.  Eskay Mining Corp

Advantage Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Eskay Mining Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eskay Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eskay Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and Eskay Mining

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

The idea behind Advantage Solutions and Eskay Mining 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.