Correlation Between Network 1 and ManpowerGroup

Can any of the company-specific risk be diversified away by investing in both Network 1 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 Network 1 and ManpowerGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network 1 Technologies and ManpowerGroup, you can compare the effects of market volatilities on Network 1 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 Network 1 with a short position of ManpowerGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network 1 and ManpowerGroup.

Diversification Opportunities for Network 1 and ManpowerGroup

0.64

Correlation Coefficient

Network 1  ManpowerGroup

Poor diversification

The 3 months correlation between Network and ManpowerGroup is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Network 1 Technologies and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Network 1 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 Network 1 Technologies 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 Network 1 i.e., Network 1 and ManpowerGroup go up and down completely randomly.

Pair Corralation between Network 1 and ManpowerGroup

Given the investment horizon of 90 days Network 1 Technologies is expected to generate 1.73 times more return on investment than ManpowerGroup. However, Network 1 is 1.73 times more volatile than ManpowerGroup. It trades about -0.04 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.08 per unit of risk. If you would invest  152.00  in Network 1 Technologies on September 5, 2024 and sell it today you would lose (18.00) from holding Network 1 Technologies or give up 11.84% of portfolio value over 90 days.

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

Network 1 Technologies  vs.  ManpowerGroup

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 inconsistent 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 Network 1 and ManpowerGroup

The main advantage of trading using opposite Network 1 and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network 1 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 Network 1 Technologies 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.