Correlation Between First Advantage and CBIZ

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

Diversification Opportunities for First Advantage and CBIZ

0.97

Correlation Coefficient

First Advantage  CBIZ

Almost no diversification

The 3 months correlation between First and CBIZ is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc 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 CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of First Advantage i.e., First Advantage and CBIZ go up and down completely randomly.

Pair Corralation between First Advantage and CBIZ

Allowing for the 90-day total investment horizon First Advantage is expected to generate 1.46 times less return on investment than CBIZ. In addition to that, First Advantage is 1.03 times more volatile than CBIZ Inc. It trades about 0.03 of its total potential returns per unit of risk. CBIZ Inc is currently generating about 0.05 per unit of volatility. If you would invest  5,183  in CBIZ Inc on January 3, 2025 and sell it today you would earn a total of  2,203  from holding CBIZ Inc or generate 42.5% return on investment over 90 days.

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

First Advantage Corp  vs.  CBIZ Inc

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.

CBIZ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBIZ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with First Advantage and CBIZ

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

The idea behind First Advantage Corp and CBIZ Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.