Correlation Between Adecco and ManpowerGroup

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

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

Diversification Opportunities for Adecco and ManpowerGroup

0.75

Correlation Coefficient

Adecco  ManpowerGroup

Poor diversification

The 3 months correlation between Adecco and ManpowerGroup is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Adecco 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 Adecco Group 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 Adecco i.e., Adecco and ManpowerGroup go up and down completely randomly.

Pair Corralation between Adecco and ManpowerGroup

Assuming the 90 days horizon Adecco Group is expected to under-perform the ManpowerGroup. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adecco Group is 1.09 times less risky than ManpowerGroup. The pink sheet trades about -0.19 of its potential returns per unit of risk. The ManpowerGroup is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  7,194  in ManpowerGroup on September 3, 2024 and sell it today you would lose (757.00) from holding ManpowerGroup or give up 10.52% of portfolio value over 90 days.

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

Adecco Group  vs.  ManpowerGroup

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Adecco and ManpowerGroup

The main advantage of trading using opposite Adecco and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecco 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 Adecco Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.