Correlation Between Advantage Solutions and Nexxen International

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

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

Diversification Opportunities for Advantage Solutions and Nexxen International

-0.72

Correlation Coefficient

Advantage Solutions  Nexxen International

Pay attention - limited upside

The 3 months correlation between Advantage and Nexxen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Nexxen International go up and down completely randomly.

Pair Corralation between Advantage Solutions and Nexxen International

Assuming the 90 days horizon Advantage Solutions is expected to generate 5.39 times more return on investment than Nexxen International. However, Advantage Solutions is 5.39 times more volatile than Nexxen International. It trades about 0.05 of its potential returns per unit of risk. Nexxen International is currently generating about 0.03 per unit of risk. If you would invest  18.00  in Advantage Solutions on October 21, 2024 and sell it today you would lose (16.29) from holding Advantage Solutions or give up 90.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.62%
Values	Daily Returns

Advantage Solutions  vs.  Nexxen International

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.

Nexxen International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and Nexxen International

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

The idea behind Advantage Solutions and Nexxen International 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.