Correlation Between Kforce and Labor Smart
Can any of the company-specific risk be diversified away by investing in both Kforce and Labor Smart 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 Labor Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kforce Inc and Labor Smart, you can compare the effects of market volatilities on Kforce and Labor Smart 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 Labor Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kforce and Labor Smart.
Diversification Opportunities for Kforce and Labor Smart
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kforce and Labor is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and Labor Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labor Smart 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 Labor Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labor Smart has no effect on the direction of Kforce i.e., Kforce and Labor Smart go up and down completely randomly.
Pair Corralation between Kforce and Labor Smart
Given the investment horizon of 90 days Kforce Inc is expected to under-perform the Labor Smart. But the stock apears to be less risky and, when comparing its historical volatility, Kforce Inc is 11.91 times less risky than Labor Smart. The stock trades about -0.02 of its potential returns per unit of risk. The Labor Smart is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.05 in Labor Smart on September 14, 2024 and sell it today you would earn a total of 0.11 from holding Labor Smart or generate 220.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kforce Inc vs. Labor Smart
Performance |
| Timeline |
| Kforce Inc |
| Labor Smart |
Kforce and Labor Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kforce and Labor Smart
The main advantage of trading using opposite Kforce and Labor Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kforce position performs unexpectedly, Labor Smart 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 Labor Smart will offset losses from the drop in Labor Smart's long position.| Kforce vs. Heidrick Struggles International | Kforce vs. ManpowerGroup | Kforce vs. Korn Ferry | Kforce vs. Hudson Global |
| Labor Smart vs. HQ Global Education | Labor Smart vs. Innerscope Advertising Agency | Labor Smart vs. Amazonas Florestal | Labor Smart vs. Viper Networks |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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