Correlation Between Kforce and First Advantage

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

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

Diversification Opportunities for Kforce and First Advantage

0.18

Correlation Coefficient

Kforce  First Advantage

Average diversification

The 3 months correlation between Kforce and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage Corp and Kforce 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 Kforce Inc are associated (or correlated) with First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of Kforce i.e., Kforce and First Advantage go up and down completely randomly.

Pair Corralation between Kforce and First Advantage

Given the investment horizon of 90 days Kforce Inc is expected to under-perform the First Advantage. In addition to that, Kforce is 1.04 times more volatile than First Advantage Corp. It trades about -0.03 of its total potential returns per unit of risk. First Advantage Corp is currently generating about 0.04 per unit of volatility. If you would invest  1,633  in First Advantage Corp on October 13, 2024 and sell it today you would earn a total of  112.00  from holding First Advantage Corp or generate 6.86% return on investment over 90 days.

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

Kforce Inc  vs.  First Advantage Corp

Kforce Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kforce is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Kforce and First Advantage

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

The idea behind Kforce Inc and First Advantage Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.