Correlation Between TrueBlue and Professional Diversity

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

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

Diversification Opportunities for TrueBlue and Professional Diversity

0.78

Correlation Coefficient

TrueBlue  Professional Diversity

Poor diversification

The 3 months correlation between TrueBlue and Professional is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TrueBlue and Professional Diversity Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Diversity and TrueBlue 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 TrueBlue are associated (or correlated) with Professional Diversity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Diversity has no effect on the direction of TrueBlue i.e., TrueBlue and Professional Diversity go up and down completely randomly.

Pair Corralation between TrueBlue and Professional Diversity

Considering the 90-day investment horizon TrueBlue is expected to generate 0.58 times more return on investment than Professional Diversity. However, TrueBlue is 1.71 times less risky than Professional Diversity. It trades about -0.11 of its potential returns per unit of risk. Professional Diversity Network is currently generating about -0.17 per unit of risk. If you would invest  784.00  in TrueBlue on January 2, 2025 and sell it today you would lose (220.00) from holding TrueBlue or give up 28.06% of portfolio value over 90 days.

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

TrueBlue  vs.  Professional Diversity Network

TrueBlue

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueBlue 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 fundamental drivers remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Professional Diversity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Professional Diversity Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with TrueBlue and Professional Diversity

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

The idea behind TrueBlue and Professional Diversity Network 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.