Correlation Between Advantage Solutions and Mason Graphite

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

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

Diversification Opportunities for Advantage Solutions and Mason Graphite

0.31

Correlation Coefficient

Advantage Solutions  Mason Graphite

Weak diversification

The 3 months correlation between Advantage and Mason is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite 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 Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Mason Graphite go up and down completely randomly.

Pair Corralation between Advantage Solutions and Mason Graphite

Assuming the 90 days horizon Advantage Solutions is expected to generate 1.4 times more return on investment than Mason Graphite. However, Advantage Solutions is 1.4 times more volatile than Mason Graphite. It trades about 0.06 of its potential returns per unit of risk. Mason Graphite is currently generating about 0.06 per unit of risk. If you would invest  1.27  in Advantage Solutions on December 29, 2024 and sell it today you would lose (0.07) from holding Advantage Solutions or give up 5.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Advantage Solutions  vs.  Mason Graphite

Advantage Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 4 (%) 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.

Mason Graphite

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mason Graphite are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Mason Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and Mason Graphite

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

The idea behind Advantage Solutions and Mason Graphite 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.