Correlation Between Kforce and Randstad Holdings

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

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

Diversification Opportunities for Kforce and Randstad Holdings

0.14

Correlation Coefficient

Kforce  Randstad Holdings

Average diversification

The 3 months correlation between Kforce and Randstad is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and Kforce 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 Kforce Inc are associated (or correlated) with Randstad Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad Holdings has no effect on the direction of Kforce i.e., Kforce and Randstad Holdings go up and down completely randomly.

Pair Corralation between Kforce and Randstad Holdings

Given the investment horizon of 90 days Kforce Inc is expected to under-perform the Randstad Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Kforce Inc is 1.19 times less risky than Randstad Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Randstad Holdings NV is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,514  in Randstad Holdings NV on March 7, 2024 and sell it today you would earn a total of  135.00  from holding Randstad Holdings NV or generate 5.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kforce Inc  vs.  Randstad Holdings NV

Kforce Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Randstad Holdings

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Kforce and Randstad Holdings

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

The idea behind Kforce Inc and Randstad Holdings NV 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.