Correlation Between Charter Communications and ManpowerGroup

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

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

Diversification Opportunities for Charter Communications and ManpowerGroup

0.56

Correlation Coefficient

Charter Communications  ManpowerGroup

Very weak diversification

The 3 months correlation between Charter and ManpowerGroup is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and ManpowerGroup go up and down completely randomly.

Pair Corralation between Charter Communications and ManpowerGroup

Assuming the 90 days trading horizon Charter Communications is expected to generate 0.66 times more return on investment than ManpowerGroup. However, Charter Communications is 1.52 times less risky than ManpowerGroup. It trades about 0.05 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.01 per unit of risk. If you would invest  33,780  in Charter Communications on December 5, 2024 and sell it today you would earn a total of  960.00  from holding Charter Communications or generate 2.84% return on investment over 90 days.

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

Charter Communications  vs.  ManpowerGroup

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 Charter Communications and ManpowerGroup

The main advantage of trading using opposite Charter Communications and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.