Correlation Between LIFE + and ManpowerGroup

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

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

Diversification Opportunities for LIFE + and ManpowerGroup

0.6

Correlation Coefficient

LIFE +  ManpowerGroup

Poor diversification

The 3 months correlation between LIFE and ManpowerGroup is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and LIFE + 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 LIFE BANC SPLIT 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 LIFE + i.e., LIFE + and ManpowerGroup go up and down completely randomly.

Pair Corralation between LIFE + and ManpowerGroup

Assuming the 90 days horizon LIFE BANC SPLIT is expected to under-perform the ManpowerGroup. In addition to that, LIFE + is 1.33 times more volatile than ManpowerGroup. It trades about -0.04 of its total potential returns per unit of risk. ManpowerGroup is currently generating about -0.01 per unit of volatility. If you would invest  5,600  in ManpowerGroup on December 5, 2024 and sell it today you would lose (100.00) from holding ManpowerGroup or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

LIFE BANC SPLIT  vs.  ManpowerGroup

LIFE BANC SPLIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFE BANC SPLIT 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.

ManpowerGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days ManpowerGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 LIFE + and ManpowerGroup

The main advantage of trading using opposite LIFE + and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + 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 LIFE BANC SPLIT 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.