Correlation Between ManpowerGroup and Kforce

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

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

Diversification Opportunities for ManpowerGroup and Kforce

-0.12

Correlation Coefficient

ManpowerGroup  Kforce

Good diversification

The 3 months correlation between ManpowerGroup and Kforce is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and ManpowerGroup 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 ManpowerGroup are associated (or correlated) with Kforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kforce Inc has no effect on the direction of ManpowerGroup i.e., ManpowerGroup and Kforce go up and down completely randomly.

Pair Corralation between ManpowerGroup and Kforce

Considering the 90-day investment horizon ManpowerGroup is expected to generate 1.05 times more return on investment than Kforce. However, ManpowerGroup is 1.05 times more volatile than Kforce Inc. It trades about 0.32 of its potential returns per unit of risk. Kforce Inc is currently generating about 0.02 per unit of risk. If you would invest  7,056  in ManpowerGroup on February 13, 2024 and sell it today you would earn a total of  711.00  from holding ManpowerGroup or generate 10.08% return on investment over 90 days.

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

ManpowerGroup  vs.  Kforce Inc

ManpowerGroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ManpowerGroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ManpowerGroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 rather sound basic indicators, Kforce is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ManpowerGroup and Kforce

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

The idea behind ManpowerGroup and Kforce Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.