Correlation Between LegalZoom and ManpowerGroup

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

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

Diversification Opportunities for LegalZoom and ManpowerGroup

-0.7

Correlation Coefficient

LegalZoom  ManpowerGroup

Excellent diversification

The 3 months correlation between LegalZoom and ManpowerGroup is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LegalZoom and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and LegalZoom 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 LegalZoom are associated (or correlated) with ManpowerGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ManpowerGroup has no effect on the direction of LegalZoom i.e., LegalZoom and ManpowerGroup go up and down completely randomly.

Pair Corralation between LegalZoom and ManpowerGroup

Allowing for the 90-day total investment horizon LegalZoom is expected to generate 1.36 times more return on investment than ManpowerGroup. However, LegalZoom is 1.36 times more volatile than ManpowerGroup. It trades about 0.13 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.08 per unit of risk. If you would invest  646.00  in LegalZoom on September 1, 2024 and sell it today you would earn a total of  147.00  from holding LegalZoom or generate 22.76% return on investment over 90 days.

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

LegalZoom  vs.  ManpowerGroup

LegalZoom

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LegalZoom are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, LegalZoom showed solid returns over the last few months and may actually be approaching a breakup point.

ManpowerGroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ManpowerGroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with LegalZoom and ManpowerGroup

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

The idea behind LegalZoom and ManpowerGroup 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.