Correlation Between Kforce and Manhattan Associates

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

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

Diversification Opportunities for Kforce and Manhattan Associates

0.05

Correlation Coefficient

Kforce  Manhattan Associates

Significant diversification

The 3 months correlation between Kforce and Manhattan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates and Kforce 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 Kforce Inc are associated (or correlated) with Manhattan Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Associates has no effect on the direction of Kforce i.e., Kforce and Manhattan Associates go up and down completely randomly.

Pair Corralation between Kforce and Manhattan Associates

Given the investment horizon of 90 days Kforce Inc is expected to under-perform the Manhattan Associates. But the stock apears to be less risky and, when comparing its historical volatility, Kforce Inc is 1.5 times less risky than Manhattan Associates. The stock trades about -0.07 of its potential returns per unit of risk. The Manhattan Associates is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  27,156  in Manhattan Associates on September 21, 2024 and sell it today you would earn a total of  870.00  from holding Manhattan Associates or generate 3.2% return on investment over 90 days.

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

Kforce Inc  vs.  Manhattan Associates

Kforce Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Manhattan Associates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manhattan Associates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Manhattan Associates is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kforce and Manhattan Associates

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

The idea behind Kforce Inc and Manhattan Associates 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.