Correlation Between Robert Half and Fortescue Metals

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

By analyzing existing cross correlation between Robert Half International and Fortescue Metals Group, you can compare the effects of market volatilities on Robert Half and Fortescue Metals 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 Robert Half with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robert Half and Fortescue Metals.

Diversification Opportunities for Robert Half and Fortescue Metals

-0.56

Correlation Coefficient

Robert Half  Fortescue Metals

Excellent diversification

The 3 months correlation between Robert and Fortescue is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Robert Half International and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Robert Half 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 Robert Half International are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Robert Half i.e., Robert Half and Fortescue Metals go up and down completely randomly.

Pair Corralation between Robert Half and Fortescue Metals

Assuming the 90 days horizon Robert Half International is expected to generate 0.71 times more return on investment than Fortescue Metals. However, Robert Half International is 1.4 times less risky than Fortescue Metals. It trades about -0.16 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.23 per unit of risk. If you would invest  7,000  in Robert Half International on October 9, 2024 and sell it today you would lose (250.00) from holding Robert Half International or give up 3.57% of portfolio value over 90 days.

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

Robert Half International  vs.  Fortescue Metals Group

Robert Half International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robert Half International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Robert Half reported solid returns over the last few months and may actually be approaching a breakup point.

Fortescue Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Robert Half and Fortescue Metals

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

The idea behind Robert Half International and Fortescue Metals Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.