Correlation Between Kforce and ASGN Incorporated

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

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

Diversification Opportunities for Kforce and ASGN Incorporated

0.07

Correlation Coefficient

Kforce  ASGN Incorporated

Significant diversification

The 3 months correlation between Kforce and ASGN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and ASGN Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASGN Incorporated and Kforce 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 Kforce Inc are associated (or correlated) with ASGN Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASGN Incorporated has no effect on the direction of Kforce i.e., Kforce and ASGN Incorporated go up and down completely randomly.

Pair Corralation between Kforce and ASGN Incorporated

Assuming the 90 days horizon Kforce Inc is expected to generate 0.95 times more return on investment than ASGN Incorporated. However, Kforce Inc is 1.05 times less risky than ASGN Incorporated. It trades about 0.02 of its potential returns per unit of risk. ASGN Incorporated is currently generating about 0.01 per unit of risk. If you would invest  4,846  in Kforce Inc on September 26, 2024 and sell it today you would earn a total of  554.00  from holding Kforce Inc or generate 11.43% return on investment over 90 days.

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

Kforce Inc  vs.  ASGN Incorporated

Kforce Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kforce Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kforce is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ASGN Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kforce and ASGN Incorporated

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

The idea behind Kforce Inc and ASGN Incorporated 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.