Correlation Between Advantage Solutions and Whole Earth

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

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

Diversification Opportunities for Advantage Solutions and Whole Earth

0.06

Correlation Coefficient

Advantage Solutions  Whole Earth

Significant diversification

The 3 months correlation between Advantage and Whole is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands 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 Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Whole Earth go up and down completely randomly.

Pair Corralation between Advantage Solutions and Whole Earth

If you would invest  2.80  in Advantage Solutions on September 17, 2024 and sell it today you would lose (1.30) from holding Advantage Solutions or give up 46.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Advantage Solutions  vs.  Whole Earth Brands

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.

Whole Earth Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whole Earth Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Whole Earth is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Advantage Solutions and Whole Earth

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

The idea behind Advantage Solutions and Whole Earth Brands 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.