Correlation Between Adecco Group and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Adecco Group and FARO Technologies 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 Adecco Group and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adecco Group AG and FARO Technologies, you can compare the effects of market volatilities on Adecco Group and FARO Technologies 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 Adecco Group with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecco Group and FARO Technologies.
Diversification Opportunities for Adecco Group and FARO Technologies
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Adecco and FARO is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group AG and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Adecco Group 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 Adecco Group AG are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Adecco Group i.e., Adecco Group and FARO Technologies go up and down completely randomly.
Pair Corralation between Adecco Group and FARO Technologies
Assuming the 90 days trading horizon Adecco Group AG is expected to generate 0.79 times more return on investment than FARO Technologies. However, Adecco Group AG is 1.27 times less risky than FARO Technologies. It trades about 0.03 of its potential returns per unit of risk. FARO Technologies is currently generating about -0.02 per unit of risk. If you would invest 1,260 in Adecco Group AG on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Adecco Group AG or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adecco Group AG vs. FARO Technologies
Performance |
| Timeline |
| Adecco Group AG |
| FARO Technologies |
Adecco Group and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adecco Group and FARO Technologies
The main advantage of trading using opposite Adecco Group and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecco Group position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Adecco Group vs. Apple Inc | Adecco Group vs. Apple Inc | Adecco Group vs. Apple Inc | Adecco Group vs. Apple Inc |
| FARO Technologies vs. HEXAGON AB ADR1 | FARO Technologies vs. Superior Plus Corp | FARO Technologies vs. SIVERS SEMICONDUCTORS AB | FARO Technologies vs. NorAm Drilling AS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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