Correlation Between Labor Smart and Adecco
Can any of the company-specific risk be diversified away by investing in both Labor Smart and Adecco 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 Labor Smart and Adecco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labor Smart and Adecco Group, you can compare the effects of market volatilities on Labor Smart and Adecco 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 Labor Smart with a short position of Adecco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labor Smart and Adecco.
Diversification Opportunities for Labor Smart and Adecco
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Labor and Adecco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Labor Smart and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Labor Smart 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 Labor Smart are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Labor Smart i.e., Labor Smart and Adecco go up and down completely randomly.
Pair Corralation between Labor Smart and Adecco
Given the investment horizon of 90 days Labor Smart is expected to generate 22.64 times more return on investment than Adecco. However, Labor Smart is 22.64 times more volatile than Adecco Group. It trades about 0.16 of its potential returns per unit of risk. Adecco Group is currently generating about -0.19 per unit of risk. If you would invest 0.25 in Labor Smart on January 25, 2024 and sell it today you would earn a total of 0.37 from holding Labor Smart or generate 148.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labor Smart vs. Adecco Group
Performance |
| Timeline |
| Labor Smart |
| Adecco Group |
Labor Smart and Adecco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labor Smart and Adecco
The main advantage of trading using opposite Labor Smart and Adecco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labor Smart position performs unexpectedly, Adecco 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 Adecco will offset losses from the drop in Adecco's long position.| Labor Smart vs. HQ Global Education | Labor Smart vs. Innerscope Advertising Agency | Labor Smart vs. Amazonas Florestal | Labor Smart vs. Viper Networks |
| Adecco vs. Futuris Company | Adecco vs. Randstad Holdings NV | Adecco vs. The Caldwell Partners | Adecco vs. Kelly Services A |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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