Correlation Between Trucept and Robert Half

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

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

Diversification Opportunities for Trucept and Robert Half

0.14

Correlation Coefficient

Trucept  Robert Half

Average diversification

The 3 months correlation between Trucept and Robert is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Trucept and Robert Half International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robert Half International and Trucept 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 Trucept are associated (or correlated) with Robert Half. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robert Half International has no effect on the direction of Trucept i.e., Trucept and Robert Half go up and down completely randomly.

Pair Corralation between Trucept and Robert Half

Given the investment horizon of 90 days Trucept is expected to generate 8.03 times more return on investment than Robert Half. However, Trucept is 8.03 times more volatile than Robert Half International. It trades about 0.09 of its potential returns per unit of risk. Robert Half International is currently generating about 0.18 per unit of risk. If you would invest  3.80  in Trucept on September 2, 2024 and sell it today you would earn a total of  0.70  from holding Trucept or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Trucept  vs.  Robert Half International

Trucept

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trucept are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Trucept reported solid returns over the last few months and may actually be approaching a breakup point.

Robert Half International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Robert Half International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Robert Half demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trucept and Robert Half

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

The idea behind Trucept and Robert Half International 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.