Correlation Between Quaker Chemical and ManpowerGroup

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

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

Diversification Opportunities for Quaker Chemical and ManpowerGroup

0.16

Correlation Coefficient

Quaker Chemical  ManpowerGroup

Average diversification

The 3 months correlation between Quaker and ManpowerGroup is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and ManpowerGroup go up and down completely randomly.

Pair Corralation between Quaker Chemical and ManpowerGroup

Assuming the 90 days horizon Quaker Chemical is expected to under-perform the ManpowerGroup. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.09 times less risky than ManpowerGroup. The stock trades about -0.09 of its potential returns per unit of risk. The ManpowerGroup is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,450  in ManpowerGroup on December 23, 2024 and sell it today you would earn a total of  0.00  from holding ManpowerGroup or generate 0.0% return on investment over 90 days.

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

Quaker Chemical  vs.  ManpowerGroup

Quaker Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quaker Chemical 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.

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 nearly stable basic indicators, ManpowerGroup is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Quaker Chemical and ManpowerGroup

The main advantage of trading using opposite Quaker Chemical and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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 Quaker Chemical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.