Correlation Between Trucept and ManpowerGroup

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

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

Diversification Opportunities for Trucept and ManpowerGroup

-0.2

Correlation Coefficient

Trucept  ManpowerGroup

Good diversification

The 3 months correlation between Trucept and ManpowerGroup is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Trucept and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup and Trucept 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 Trucept 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 Trucept i.e., Trucept and ManpowerGroup go up and down completely randomly.

Pair Corralation between Trucept and ManpowerGroup

Given the investment horizon of 90 days Trucept is expected to generate 5.84 times more return on investment than ManpowerGroup. However, Trucept is 5.84 times more volatile than ManpowerGroup. It trades about 0.06 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.05 per unit of risk. If you would invest  3.95  in Trucept on January 4, 2025 and sell it today you would earn a total of  0.35  from holding Trucept or generate 8.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Trucept  vs.  ManpowerGroup

Trucept

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trucept are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Trucept reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest unsteady 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 Trucept and ManpowerGroup

The main advantage of trading using opposite Trucept and ManpowerGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trucept 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 Trucept 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.