Correlation Between S A P and ManpowerGroup
Can any of the company-specific risk be diversified away by investing in both S A P 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 S A P and ManpowerGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and ManpowerGroup, you can compare the effects of market volatilities on S A P 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 S A P with a short position of ManpowerGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and ManpowerGroup.
Diversification Opportunities for S A P and ManpowerGroup
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAP and ManpowerGroup is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and S A P 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 SAP SE 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 S A P i.e., S A P and ManpowerGroup go up and down completely randomly.
Pair Corralation between S A P and ManpowerGroup
Assuming the 90 days trading horizon SAP SE is expected to generate 0.87 times more return on investment than ManpowerGroup. However, SAP SE is 1.15 times less risky than ManpowerGroup. It trades about 0.39 of its potential returns per unit of risk. ManpowerGroup is currently generating about 0.06 per unit of risk. If you would invest 21,860 in SAP SE on September 17, 2024 and sell it today you would earn a total of 2,245 from holding SAP SE or generate 10.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SAP SE vs. ManpowerGroup
Performance |
Timeline |
SAP SE |
ManpowerGroup |
S A P and ManpowerGroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with S A P and ManpowerGroup
The main advantage of trading using opposite S A P and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P 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.S A P vs. Superior Plus Corp | S A P vs. SIVERS SEMICONDUCTORS AB | S A P vs. Norsk Hydro ASA | S A P vs. Reliance Steel Aluminum |
ManpowerGroup vs. AOYAMA TRADING | ManpowerGroup vs. MSAD INSURANCE | ManpowerGroup vs. EAT WELL INVESTMENT | ManpowerGroup vs. LIFENET INSURANCE CO |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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