Correlation Between Randstad Holdings and Weir Group

Can any of the company-specific risk be diversified away by investing in both Randstad Holdings and Weir Group 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 Weir Group 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 Weir Group PLC, you can compare the effects of market volatilities on Randstad Holdings and Weir Group 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Randstad Holdings and Weir Group.

Diversification Opportunities for Randstad Holdings and Weir Group

0.88

Correlation Coefficient

Randstad Holdings  Weir Group

Very poor diversification

The 3 months correlation between Randstad and Weir is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Randstad Holdings NV and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of Randstad Holdings i.e., Randstad Holdings and Weir Group go up and down completely randomly.

Pair Corralation between Randstad Holdings and Weir Group

Assuming the 90 days horizon Randstad Holdings is expected to generate 1.03 times less return on investment than Weir Group. In addition to that, Randstad Holdings is 1.16 times more volatile than Weir Group PLC. It trades about 0.15 of its total potential returns per unit of risk. Weir Group PLC is currently generating about 0.18 per unit of volatility. If you would invest  1,516  in Weir Group PLC on May 6, 2025 and sell it today you would earn a total of  255.00  from holding Weir Group PLC or generate 16.82% return on investment over 90 days.

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

Randstad Holdings NV  vs.  Weir Group PLC

Randstad Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Randstad Holdings NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, Randstad Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Weir Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weir Group PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Weir Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Randstad Holdings and Weir Group

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

The idea behind Randstad Holdings NV and Weir Group PLC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.