Correlation Between Deluxe Corp and Advantage Solutions

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Can any of the company-specific risk be diversified away by investing in both Deluxe Corp and Advantage Solutions 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 Deluxe Corp and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe Corp and Advantage Solutions, you can compare the effects of market volatilities on Deluxe Corp and Advantage Solutions 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 Deluxe Corp with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe Corp and Advantage Solutions.

Diversification Opportunities for Deluxe Corp and Advantage Solutions

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Deluxe and Advantage is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe Corp and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and Deluxe Corp 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 Deluxe Corp are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Deluxe Corp i.e., Deluxe Corp and Advantage Solutions go up and down completely randomly.

Pair Corralation between Deluxe Corp and Advantage Solutions

Considering the 90-day investment horizon Deluxe Corp is expected to generate 0.63 times more return on investment than Advantage Solutions. However, Deluxe Corp is 1.58 times less risky than Advantage Solutions. It trades about -0.19 of its potential returns per unit of risk. Advantage Solutions is currently generating about -0.14 per unit of risk. If you would invest  3,062  in Deluxe Corp on March 26, 2022 and sell it today you would lose (775.00)  from holding Deluxe Corp or give up 25.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Deluxe Corp  vs.  Advantage Solutions

 Performance (%) 
      Timeline 
Deluxe Corp 
Deluxe Performance
0 of 100
Over the last 90 days Deluxe Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0555
Payout Ratio
0.26
Last Split Factor
10000:7995
Forward Annual Dividend Rate
1.2
Dividend Date
2022-06-06
Ex Dividend Date
2022-05-20
Last Split Date
2001-01-02

Deluxe Price Channel

Advantage Solutions 
Advantage Performance
0 of 100
Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in July 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Structure and Payout Changes

Last Split Factor
20:1
Last Split Date
2014-09-05

Advantage Price Channel

Deluxe Corp and Advantage Solutions Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Deluxe Corp and Advantage Solutions

The main advantage of trading using opposite Deluxe Corp and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe Corp position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' long position.
The idea behind Deluxe Corp and Advantage Solutions 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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