Correlation Between Deluxe and ASGN

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

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

Diversification Opportunities for Deluxe and ASGN

-0.41

Correlation Coefficient

Deluxe  ASGN

Very good diversification

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

Pair Corralation between Deluxe and ASGN

Considering the 90-day investment horizon Deluxe is expected to generate 5.41 times less return on investment than ASGN. In addition to that, Deluxe is 1.54 times more volatile than ASGN Inc. It trades about 0.04 of its total potential returns per unit of risk. ASGN Inc is currently generating about 0.31 per unit of volatility. If you would invest  8,356  in ASGN Inc on October 23, 2024 and sell it today you would earn a total of  489.00  from holding ASGN Inc or generate 5.85% return on investment over 90 days.

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

Deluxe  vs.  ASGN Inc

Deluxe

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ASGN is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Deluxe and ASGN

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

The idea behind Deluxe and ASGN Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.