Correlation Between Advantage Solutions and Arko Corp

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

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

Diversification Opportunities for Advantage Solutions and Arko Corp

-0.16

Correlation Coefficient

Advantage Solutions  Arko Corp

Good diversification

The 3 months correlation between Advantage and Arko is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko Corp 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 Arko Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arko Corp has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Arko Corp go up and down completely randomly.

Pair Corralation between Advantage Solutions and Arko Corp

Assuming the 90 days horizon Advantage Solutions is expected to under-perform the Arko Corp. In addition to that, Advantage Solutions is 7.42 times more volatile than Arko Corp. It trades about -0.12 of its total potential returns per unit of risk. Arko Corp is currently generating about 0.41 per unit of volatility. If you would invest  649.00  in Arko Corp on September 17, 2024 and sell it today you would earn a total of  83.00  from holding Arko Corp or generate 12.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Advantage Solutions  vs.  Arko Corp

Advantage Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Arko Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arko Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Arko Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advantage Solutions and Arko Corp

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

The idea behind Advantage Solutions and Arko 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.