Correlation Between Cross Country and Insperity

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

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

Diversification Opportunities for Cross Country and Insperity

0.54

Correlation Coefficient

Cross Country  Insperity

Very weak diversification

The 3 months correlation between Cross and Insperity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cross Country Healthcare and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity and Cross Country 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 Cross Country Healthcare are associated (or correlated) with Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of Cross Country i.e., Cross Country and Insperity go up and down completely randomly.

Pair Corralation between Cross Country and Insperity

Assuming the 90 days horizon Cross Country Healthcare is expected to generate 2.99 times more return on investment than Insperity. However, Cross Country is 2.99 times more volatile than Insperity. It trades about 0.08 of its potential returns per unit of risk. Insperity is currently generating about 0.01 per unit of risk. If you would invest  1,290  in Cross Country Healthcare on September 17, 2024 and sell it today you would earn a total of  420.00  from holding Cross Country Healthcare or generate 32.56% return on investment over 90 days.

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

Cross Country Healthcare  vs.  Insperity

Cross Country Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cross Country Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cross Country reported solid returns over the last few months and may actually be approaching a breakup point.

Insperity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cross Country and Insperity

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

The idea behind Cross Country Healthcare and Insperity 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.