Correlation Between First Advantage and Manhattan Associates

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

Diversification Opportunities for First Advantage and Manhattan Associates

-0.11

Correlation Coefficient

First Advantage  Manhattan Associates

Good diversification

The 3 months correlation between First and Manhattan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates 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 Manhattan Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Associates has no effect on the direction of First Advantage i.e., First Advantage and Manhattan Associates go up and down completely randomly.

Pair Corralation between First Advantage and Manhattan Associates

Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 0.2 times more return on investment than Manhattan Associates. However, First Advantage Corp is 5.03 times less risky than Manhattan Associates. It trades about 0.22 of its potential returns per unit of risk. Manhattan Associates is currently generating about -0.27 per unit of risk. If you would invest  1,889  in First Advantage Corp on November 19, 2024 and sell it today you would earn a total of  104.00  from holding First Advantage Corp or generate 5.51% return on investment over 90 days.

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

First Advantage Corp  vs.  Manhattan Associates

First Advantage Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Advantage Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, First Advantage sustained solid returns over the last few months and may actually be approaching a breakup point.

Manhattan Associates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manhattan Associates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with First Advantage and Manhattan Associates

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

The idea behind First Advantage Corp and Manhattan Associates 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.