Correlation Between First Advantage and Shift4 Payments
Can any of the company-specific risk be diversified away by investing in both First Advantage and Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments, you can compare the effects of market volatilities on First Advantage and Shift4 Payments 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 Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Shift4 Payments.
Diversification Opportunities for First Advantage and Shift4 Payments
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Shift4 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments 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 Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of First Advantage i.e., First Advantage and Shift4 Payments go up and down completely randomly.
Pair Corralation between First Advantage and Shift4 Payments
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 1.03 times more return on investment than Shift4 Payments. However, First Advantage is 1.03 times more volatile than Shift4 Payments. It trades about 0.11 of its potential returns per unit of risk. Shift4 Payments is currently generating about 0.04 per unit of risk. If you would invest 1,400 in First Advantage Corp on March 23, 2025 and sell it today you would earn a total of 325.00 from holding First Advantage Corp or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Shift4 Payments
Performance |
| Timeline |
| First Advantage Corp |
| Shift4 Payments |
First Advantage and Shift4 Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Shift4 Payments
The main advantage of trading using opposite First Advantage and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.| First Advantage vs. Discount Print USA | First Advantage vs. Cass Information Systems | First Advantage vs. Civeo Corp | First Advantage vs. Network 1 Technologies |
| Shift4 Payments vs. SentinelOne | Shift4 Payments vs. Confluent | Shift4 Payments vs. MongoDB | Shift4 Payments vs. EverCommerce |
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.
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