Correlation Between Randstad Holdings and ManpowerGroup

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

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

Diversification Opportunities for Randstad Holdings and ManpowerGroup

0.78

Correlation Coefficient

Randstad Holdings  ManpowerGroup

Poor diversification

The 3 months correlation between Randstad and ManpowerGroup is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Randstad Holdings NV and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Randstad Holdings 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 Randstad Holdings NV 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 Randstad Holdings i.e., Randstad Holdings and ManpowerGroup go up and down completely randomly.

Pair Corralation between Randstad Holdings and ManpowerGroup

Assuming the 90 days horizon Randstad Holdings NV is expected to under-perform the ManpowerGroup. In addition to that, Randstad Holdings is 1.34 times more volatile than ManpowerGroup. It trades about -0.03 of its total potential returns per unit of risk. ManpowerGroup is currently generating about -0.02 per unit of volatility. If you would invest  5,664  in ManpowerGroup on January 5, 2025 and sell it today you would lose (202.00) from holding ManpowerGroup or give up 3.57% of portfolio value over 90 days.

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

Randstad Holdings NV  vs.  ManpowerGroup

Randstad Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Randstad Holdings NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, Randstad Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ManpowerGroup

Risk-Adjusted Performance

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 very healthy basic indicators, ManpowerGroup is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Randstad Holdings and ManpowerGroup

The main advantage of trading using opposite Randstad Holdings and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad Holdings 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 Randstad Holdings NV 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.