Correlation Between ManpowerGroup and Canadian National

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Can any of the company-specific risk be diversified away by investing in both ManpowerGroup and Canadian National 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 Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ManpowerGroup and Canadian National Railway, you can compare the effects of market volatilities on ManpowerGroup and Canadian National 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 Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of ManpowerGroup and Canadian National.

Diversification Opportunities for ManpowerGroup and Canadian National

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ManpowerGroup and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ManpowerGroup and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway 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 Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of ManpowerGroup i.e., ManpowerGroup and Canadian National go up and down completely randomly.

Pair Corralation between ManpowerGroup and Canadian National

If you would invest  12,843  in Canadian National Railway on September 1, 2022 and sell it today you would earn a total of  0.00  from holding Canadian National Railway or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ManpowerGroup  vs.  Canadian National Railway

 Performance (%) 
       Timeline  
ManpowerGroup 
ManpowerGroup Performance
0 of 100
Over the last 90 days ManpowerGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ManpowerGroup is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
Canadian National Railway 
Canadian Performance
0 of 100
Over the last 90 days Canadian National Railway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canadian National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ManpowerGroup and Canadian National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ManpowerGroup and Canadian National

The main advantage of trading using opposite ManpowerGroup and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ManpowerGroup position performs unexpectedly, Canadian National 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 Canadian National will offset losses from the drop in Canadian National's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against ManpowerGroup as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. ManpowerGroup's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, ManpowerGroup's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to ManpowerGroup.
The idea behind ManpowerGroup and Canadian National Railway 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Canadian National as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Canadian National's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Canadian National's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Canadian National Railway.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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