Correlation Between First Advantage and BrightView Holdings

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

Diversification Opportunities for First Advantage and BrightView Holdings

0.8

Correlation Coefficient

First Advantage  BrightView Holdings

Very poor diversification

The 3 months correlation between First and BrightView is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and BrightView Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightView Holdings 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 BrightView Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightView Holdings has no effect on the direction of First Advantage i.e., First Advantage and BrightView Holdings go up and down completely randomly.

Pair Corralation between First Advantage and BrightView Holdings

Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 1.16 times more return on investment than BrightView Holdings. However, First Advantage is 1.16 times more volatile than BrightView Holdings. It trades about -0.12 of its potential returns per unit of risk. BrightView Holdings is currently generating about -0.15 per unit of risk. If you would invest  1,843  in First Advantage Corp on January 3, 2025 and sell it today you would lose (375.00) from holding First Advantage Corp or give up 20.35% of portfolio value over 90 days.

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

First Advantage Corp  vs.  BrightView Holdings

First Advantage Corp

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BrightView Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightView Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with First Advantage and BrightView Holdings

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

The idea behind First Advantage Corp and BrightView Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.