Correlation Between Caldwell Partners and Adecco

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

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

Diversification Opportunities for Caldwell Partners and Adecco

0.49

Correlation Coefficient

Caldwell Partners  Adecco

Very weak diversification

The 3 months correlation between Caldwell and Adecco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Caldwell Partners and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Caldwell Partners 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 The Caldwell Partners are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and Adecco go up and down completely randomly.

Pair Corralation between Caldwell Partners and Adecco

Assuming the 90 days horizon The Caldwell Partners is expected to generate 1.47 times more return on investment than Adecco. However, Caldwell Partners is 1.47 times more volatile than Adecco Group. It trades about 0.01 of its potential returns per unit of risk. Adecco Group is currently generating about -0.19 per unit of risk. If you would invest  80.00  in The Caldwell Partners on September 1, 2024 and sell it today you would lose (1.00) from holding The Caldwell Partners or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

The Caldwell Partners  vs.  Adecco Group

Caldwell Partners

Risk-Adjusted Performance

0 of 100

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.

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Caldwell Partners and Adecco

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

The idea behind The Caldwell Partners and Adecco Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.