Correlation Between Caldwell Partners and Randstad Holdings

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

By analyzing existing cross correlation between The Caldwell Partners and Randstad Holdings NV, you can compare the effects of market volatilities on Caldwell Partners and Randstad Holdings 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 Caldwell Partners with a short position of Randstad Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Partners and Randstad Holdings.

Diversification Opportunities for Caldwell Partners and Randstad Holdings

-0.41

Correlation Coefficient

Caldwell Partners  Randstad Holdings

Very good diversification

The 3 months correlation between Caldwell and Randstad is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Caldwell Partners and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and Caldwell Partners 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 The Caldwell Partners are associated (or correlated) with Randstad Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad Holdings has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and Randstad Holdings go up and down completely randomly.

Pair Corralation between Caldwell Partners and Randstad Holdings

Assuming the 90 days horizon The Caldwell Partners is expected to under-perform the Randstad Holdings. In addition to that, Caldwell Partners is 1.54 times more volatile than Randstad Holdings NV. It trades about -0.14 of its total potential returns per unit of risk. Randstad Holdings NV is currently generating about 0.06 per unit of volatility. If you would invest  2,100  in Randstad Holdings NV on December 31, 2024 and sell it today you would earn a total of  142.00  from holding Randstad Holdings NV or generate 6.76% return on investment over 90 days.

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

The Caldwell Partners  vs.  Randstad Holdings NV

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Caldwell Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Randstad Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Randstad Holdings NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, Randstad Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Caldwell Partners and Randstad Holdings

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

The idea behind The Caldwell Partners and Randstad Holdings NV 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.