Correlation Between TrueBlue and Caldwell Partners

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

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

Diversification Opportunities for TrueBlue and Caldwell Partners

0.32

Correlation Coefficient

TrueBlue  Caldwell Partners

Weak diversification

The 3 months correlation between TrueBlue and Caldwell is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding TrueBlue and The Caldwell Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners and TrueBlue 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 TrueBlue are associated (or correlated) with Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of TrueBlue i.e., TrueBlue and Caldwell Partners go up and down completely randomly.

Pair Corralation between TrueBlue and Caldwell Partners

Considering the 90-day investment horizon TrueBlue is expected to under-perform the Caldwell Partners. In addition to that, TrueBlue is 1.05 times more volatile than The Caldwell Partners. It trades about -0.08 of its total potential returns per unit of risk. The Caldwell Partners is currently generating about 0.01 per unit of volatility. If you would invest  79.00  in The Caldwell Partners on November 29, 2024 and sell it today you would lose (1.00) from holding The Caldwell Partners or give up 1.27% of portfolio value over 90 days.

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

TrueBlue  vs.  The Caldwell Partners

TrueBlue

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueBlue has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Caldwell Partners

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TrueBlue and Caldwell Partners

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

The idea behind TrueBlue and The Caldwell Partners 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.