Correlation Between SPAR and First Advantage

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

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

Diversification Opportunities for SPAR and First Advantage

0.16

Correlation Coefficient

SPAR  First Advantage

Average diversification

The 3 months correlation between SPAR and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group 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 SPAR 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 SPAR Group 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 SPAR i.e., SPAR and First Advantage go up and down completely randomly.

Pair Corralation between SPAR and First Advantage

Given the investment horizon of 90 days SPAR is expected to generate 1.72 times less return on investment than First Advantage. In addition to that, SPAR is 1.02 times more volatile than First Advantage Corp. It trades about 0.04 of its total potential returns per unit of risk. First Advantage Corp is currently generating about 0.07 per unit of volatility. If you would invest  1,483  in First Advantage Corp on May 4, 2025 and sell it today you would earn a total of  164.00  from holding First Advantage Corp or generate 11.06% return on investment over 90 days.

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

SPAR Group  vs.  First Advantage Corp

SPAR Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, SPAR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Advantage Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Advantage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Advantage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPAR and First Advantage

The main advantage of trading using opposite SPAR and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPAR 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 SPAR Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.