Correlation Between ManpowerGroup and COMPUTERSHARE

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

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

Diversification Opportunities for ManpowerGroup and COMPUTERSHARE

-0.53

Correlation Coefficient

ManpowerGroup  COMPUTERSHARE

Excellent diversification

The 3 months correlation between ManpowerGroup and COMPUTERSHARE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE 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 COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of ManpowerGroup i.e., ManpowerGroup and COMPUTERSHARE go up and down completely randomly.

Pair Corralation between ManpowerGroup and COMPUTERSHARE

Assuming the 90 days horizon ManpowerGroup is expected to under-perform the COMPUTERSHARE. In addition to that, ManpowerGroup is 1.12 times more volatile than COMPUTERSHARE. It trades about -0.13 of its total potential returns per unit of risk. COMPUTERSHARE is currently generating about 0.25 per unit of volatility. If you would invest  1,550  in COMPUTERSHARE on September 23, 2024 and sell it today you would earn a total of  450.00  from holding COMPUTERSHARE or generate 29.03% return on investment over 90 days.

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

ManpowerGroup  vs.  COMPUTERSHARE

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.

COMPUTERSHARE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ManpowerGroup and COMPUTERSHARE

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

The idea behind ManpowerGroup and COMPUTERSHARE 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.