Correlation Between Futuris and Adecco
Can any of the company-specific risk be diversified away by investing in both Futuris 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 Futuris and Adecco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futuris Company and Adecco Group, you can compare the effects of market volatilities on Futuris 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 Futuris with a short position of Adecco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuris and Adecco.
Diversification Opportunities for Futuris and Adecco
Weak diversification
The 3 months correlation between Futuris and Adecco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Futuris Company and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Futuris 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 Futuris Company 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 Futuris i.e., Futuris and Adecco go up and down completely randomly.
Pair Corralation between Futuris and Adecco
Given the investment horizon of 90 days Futuris Company is expected to generate 5.71 times more return on investment than Adecco. However, Futuris is 5.71 times more volatile than Adecco Group. It trades about -0.03 of its potential returns per unit of risk. Adecco Group is currently generating about -0.59 per unit of risk. If you would invest 1.80 in Futuris Company on August 26, 2024 and sell it today you would lose (0.29) from holding Futuris Company or give up 16.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futuris Company vs. Adecco Group
Performance |
| Timeline |
| Futuris Company |
| Adecco Group |
Futuris and Adecco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futuris and Adecco
The main advantage of trading using opposite Futuris and Adecco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuris 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.| Futuris vs. Hire Technologies | Futuris vs. Trucept | Futuris vs. Randstad Holdings NV | Futuris vs. The Caldwell Partners |
| Adecco vs. ManpowerGroup | Adecco vs. Robert Half International | Adecco vs. Hire Technologies | Adecco vs. The Caldwell Partners |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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