Correlation Between ManpowerGroup and Insperity

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

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

Diversification Opportunities for ManpowerGroup and Insperity

0.55

Correlation Coefficient

ManpowerGroup  Insperity

Very weak diversification

The 3 months correlation between ManpowerGroup and Insperity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity 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 Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of ManpowerGroup i.e., ManpowerGroup and Insperity go up and down completely randomly.

Pair Corralation between ManpowerGroup and Insperity

Assuming the 90 days horizon ManpowerGroup is expected to under-perform the Insperity. But the stock apears to be less risky and, when comparing its historical volatility, ManpowerGroup is 1.62 times less risky than Insperity. The stock trades about -0.13 of its potential returns per unit of risk. The Insperity is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  8,138  in Insperity on September 23, 2024 and sell it today you would lose (838.00) from holding Insperity or give up 10.3% of portfolio value over 90 days.

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

ManpowerGroup  vs.  Insperity

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. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Insperity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insperity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ManpowerGroup and Insperity

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

The idea behind ManpowerGroup and Insperity 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.