Correlation Between Advantage Solutions and Nickel Creek

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

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

Diversification Opportunities for Advantage Solutions and Nickel Creek

0.04

Correlation Coefficient

Advantage Solutions  Nickel Creek

Significant diversification

The 3 months correlation between Advantage and Nickel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum 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 Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Nickel Creek go up and down completely randomly.

Pair Corralation between Advantage Solutions and Nickel Creek

Assuming the 90 days horizon Advantage Solutions is expected to generate 4.25 times more return on investment than Nickel Creek. However, Advantage Solutions is 4.25 times more volatile than Nickel Creek Platinum. It trades about 0.07 of its potential returns per unit of risk. Nickel Creek Platinum is currently generating about -0.04 per unit of risk. If you would invest  2.50  in Advantage Solutions on September 12, 2024 and sell it today you would lose (0.70) from holding Advantage Solutions or give up 28.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Advantage Solutions  vs.  Nickel Creek Platinum

Advantage Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 5 (%) 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.

Nickel Creek Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Advantage Solutions and Nickel Creek

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

The idea behind Advantage Solutions and Nickel Creek Platinum 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.