Correlation Between Cross Country and Korn Ferry

Can any of the company-specific risk be diversified away by investing in both Cross Country and Korn Ferry 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 Korn Ferry 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 Korn Ferry, you can compare the effects of market volatilities on Cross Country and Korn Ferry 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 Korn Ferry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cross Country and Korn Ferry.

Diversification Opportunities for Cross Country and Korn Ferry

0.74

Correlation Coefficient

Cross Country  Korn Ferry

Poor diversification

The 3 months correlation between Cross and Korn is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cross Country Healthcare and Korn Ferry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korn Ferry 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 Korn Ferry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korn Ferry has no effect on the direction of Cross Country i.e., Cross Country and Korn Ferry go up and down completely randomly.

Pair Corralation between Cross Country and Korn Ferry

Assuming the 90 days horizon Cross Country Healthcare is expected to under-perform the Korn Ferry. But the stock apears to be less risky and, when comparing its historical volatility, Cross Country Healthcare is 1.29 times less risky than Korn Ferry. The stock trades about -0.24 of its potential returns per unit of risk. The Korn Ferry is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  6,500  in Korn Ferry on December 27, 2024 and sell it today you would lose (300.00) from holding Korn Ferry or give up 4.62% of portfolio value over 90 days.

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

Cross Country Healthcare  vs.  Korn Ferry

Cross Country Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cross Country Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Korn Ferry

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cross Country and Korn Ferry

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

The idea behind Cross Country Healthcare and Korn Ferry 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.