Correlation Between First Advantage and I3 Verticals

Can any of the company-specific risk be diversified away by investing in both First Advantage and I3 Verticals 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 First Advantage and I3 Verticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Advantage Corp and i3 Verticals, you can compare the effects of market volatilities on First Advantage and I3 Verticals 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 First Advantage with a short position of I3 Verticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and I3 Verticals.

Diversification Opportunities for First Advantage and I3 Verticals

-0.19

Correlation Coefficient

First Advantage  I3 Verticals

Good diversification

The 3 months correlation between First and IIIV is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and i3 Verticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i3 Verticals and First Advantage 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 First Advantage Corp are associated (or correlated) with I3 Verticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i3 Verticals has no effect on the direction of First Advantage i.e., First Advantage and I3 Verticals go up and down completely randomly.

Pair Corralation between First Advantage and I3 Verticals

Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 0.74 times more return on investment than I3 Verticals. However, First Advantage Corp is 1.35 times less risky than I3 Verticals. It trades about 0.06 of its potential returns per unit of risk. i3 Verticals is currently generating about -0.01 per unit of risk. If you would invest  1,172  in First Advantage Corp on October 13, 2024 and sell it today you would earn a total of  573.00  from holding First Advantage Corp or generate 48.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

First Advantage Corp  vs.  i3 Verticals

First Advantage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Advantage Corp 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

i3 Verticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in i3 Verticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, I3 Verticals is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Advantage and I3 Verticals

The main advantage of trading using opposite First Advantage and I3 Verticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, I3 Verticals 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 I3 Verticals will offset losses from the drop in I3 Verticals' long position.

The idea behind First Advantage Corp and i3 Verticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.