Correlation Between ManpowerGroup and Randstad Holdings

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

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

Diversification Opportunities for ManpowerGroup and Randstad Holdings

0.53

Correlation Coefficient

ManpowerGroup  Randstad Holdings

Very weak diversification

The 3 months correlation between ManpowerGroup and Randstad is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and ManpowerGroup 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 ManpowerGroup 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 ManpowerGroup i.e., ManpowerGroup and Randstad Holdings go up and down completely randomly.

Pair Corralation between ManpowerGroup and Randstad Holdings

Considering the 90-day investment horizon ManpowerGroup is expected to generate 0.82 times more return on investment than Randstad Holdings. However, ManpowerGroup is 1.22 times less risky than Randstad Holdings. It trades about -0.07 of its potential returns per unit of risk. Randstad Holdings NV is currently generating about -0.06 per unit of risk. If you would invest  5,895  in ManpowerGroup on November 20, 2024 and sell it today you would lose (371.00) from holding ManpowerGroup or give up 6.29% of portfolio value over 90 days.

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

ManpowerGroup  vs.  Randstad Holdings NV

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. In spite of very healthy basic indicators, ManpowerGroup is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Randstad Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Randstad Holdings NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ManpowerGroup and Randstad Holdings

The main advantage of trading using opposite ManpowerGroup and Randstad Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ManpowerGroup 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 ManpowerGroup 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.