Correlation Between ManpowerGroup and Adecco

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

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

Diversification Opportunities for ManpowerGroup and Adecco

0.75

Correlation Coefficient

ManpowerGroup  Adecco

Poor diversification

The 3 months correlation between ManpowerGroup and Adecco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and ManpowerGroup 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 ManpowerGroup 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 ManpowerGroup i.e., ManpowerGroup and Adecco go up and down completely randomly.

Pair Corralation between ManpowerGroup and Adecco

Considering the 90-day investment horizon ManpowerGroup is expected to generate 1.09 times more return on investment than Adecco. However, ManpowerGroup is 1.09 times more volatile than Adecco Group. It trades about -0.08 of its potential returns per unit of risk. Adecco Group is currently generating about -0.19 per unit of risk. If you would invest  7,194  in ManpowerGroup on September 3, 2024 and sell it today you would lose (757.00) from holding ManpowerGroup or give up 10.52% of portfolio value over 90 days.

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

ManpowerGroup  vs.  Adecco Group

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.

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ManpowerGroup and Adecco

The main advantage of trading using opposite ManpowerGroup and Adecco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ManpowerGroup 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 ManpowerGroup 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.