Correlation Between Hays Plc and ManpowerGroup

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

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

Diversification Opportunities for Hays Plc and ManpowerGroup

0.84

Correlation Coefficient

Hays Plc  ManpowerGroup

Very poor diversification

The 3 months correlation between Hays and ManpowerGroup is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hays plc and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Hays Plc 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 Hays plc 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 Hays Plc i.e., Hays Plc and ManpowerGroup go up and down completely randomly.

Pair Corralation between Hays Plc and ManpowerGroup

Assuming the 90 days horizon Hays plc is expected to generate 1.82 times more return on investment than ManpowerGroup. However, Hays Plc is 1.82 times more volatile than ManpowerGroup. It trades about -0.03 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.06 per unit of risk. If you would invest  104.00  in Hays plc on September 17, 2024 and sell it today you would lose (9.00) from holding Hays plc or give up 8.65% of portfolio value over 90 days.

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

Hays plc  vs.  ManpowerGroup

Hays plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hays plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hays Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. 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.

Pair Trading with Hays Plc and ManpowerGroup

The main advantage of trading using opposite Hays Plc and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hays Plc 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 Hays plc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.