Correlation Between BG Staffing and Hirequest

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Can any of the company-specific risk be diversified away by investing in both BG Staffing and Hirequest 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 BG Staffing and Hirequest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Staffing and Hirequest, you can compare the effects of market volatilities on BG Staffing and Hirequest 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 BG Staffing with a short position of Hirequest. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Staffing and Hirequest.

Diversification Opportunities for BG Staffing and Hirequest

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BGSF and Hirequest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BG Staffing and Hirequest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirequest and BG Staffing 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 BG Staffing are associated (or correlated) with Hirequest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirequest has no effect on the direction of BG Staffing i.e., BG Staffing and Hirequest go up and down completely randomly.

Pair Corralation between BG Staffing and Hirequest

Given the investment horizon of 90 days BG Staffing is expected to generate 0.65 times more return on investment than Hirequest. However, BG Staffing is 1.53 times less risky than Hirequest. It trades about 0.07 of its potential returns per unit of risk. Hirequest is currently generating about -0.06 per unit of risk. If you would invest  1,009  in BG Staffing on December 29, 2023 and sell it today you would earn a total of  21.00  from holding BG Staffing or generate 2.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BG Staffing  vs.  Hirequest

 Performance 
       Timeline  
BG Staffing 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in BG Staffing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BG Staffing may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Hirequest 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Hirequest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

BG Staffing and Hirequest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BG Staffing and Hirequest

The main advantage of trading using opposite BG Staffing and Hirequest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Staffing position performs unexpectedly, Hirequest 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 Hirequest will offset losses from the drop in Hirequest's long position.
The idea behind BG Staffing and Hirequest 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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