Correlation Between First Advantage and International Money

Can any of the company-specific risk be diversified away by investing in both First Advantage and International Money 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 International Money 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 International Money Express, you can compare the effects of market volatilities on First Advantage and International Money 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 International Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and International Money.

Diversification Opportunities for First Advantage and International Money

-0.04

Correlation Coefficient

First Advantage  International Money

Good diversification

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

Pair Corralation between First Advantage and International Money

Allowing for the 90-day total investment horizon First Advantage Corp is expected to under-perform the International Money. But the stock apears to be less risky and, when comparing its historical volatility, First Advantage Corp is 1.0 times less risky than International Money. The stock trades about -0.22 of its potential returns per unit of risk. The International Money Express is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,129  in International Money Express on September 26, 2024 and sell it today you would lose (59.00) from holding International Money Express or give up 2.77% of portfolio value over 90 days.

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

First Advantage Corp  vs.  International Money Express

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 somewhat strong basic indicators, First Advantage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

International Money

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Money Express are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, International Money may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Advantage and International Money

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

The idea behind First Advantage Corp and International Money Express 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.