Correlation Between MSAD INSURANCE and ManpowerGroup

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

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

Diversification Opportunities for MSAD INSURANCE and ManpowerGroup

-0.25

Correlation Coefficient

MSAD INSURANCE  ManpowerGroup

Very good diversification

The 3 months correlation between MSAD and ManpowerGroup is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and MSAD INSURANCE 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 MSAD INSURANCE are associated (or correlated) with ManpowerGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ManpowerGroup has no effect on the direction of MSAD INSURANCE i.e., MSAD INSURANCE and ManpowerGroup go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and ManpowerGroup

Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 1.3 times more return on investment than ManpowerGroup. However, MSAD INSURANCE is 1.3 times more volatile than ManpowerGroup. It trades about 0.11 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.01 per unit of risk. If you would invest  1,140  in MSAD INSURANCE on September 17, 2024 and sell it today you would earn a total of  1,020  from holding MSAD INSURANCE or generate 89.47% return on investment over 90 days.

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

MSAD INSURANCE  vs.  ManpowerGroup

MSAD INSURANCE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD INSURANCE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, MSAD INSURANCE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ManpowerGroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ManpowerGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MSAD INSURANCE and ManpowerGroup

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

The idea behind MSAD INSURANCE and ManpowerGroup 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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.