Correlation Between ABB and Dave Busters
Can any of the company-specific risk be diversified away by investing in both ABB and Dave Busters 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 ABB and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABB and Dave Busters Entertainment, you can compare the effects of market volatilities on ABB and Dave Busters 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 ABB with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB and Dave Busters.
Diversification Opportunities for ABB and Dave Busters
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABB and Dave is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ABB and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and ABB 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 ABB are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of ABB i.e., ABB and Dave Busters go up and down completely randomly.
Pair Corralation between ABB and Dave Busters
Assuming the 90 days trading horizon ABB is expected to generate 0.63 times more return on investment than Dave Busters. However, ABB is 1.58 times less risky than Dave Busters. It trades about 0.1 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.0 per unit of risk. If you would invest 3,439 in ABB on September 14, 2024 and sell it today you would earn a total of 2,111 from holding ABB or generate 61.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABB vs. Dave Busters Entertainment
Performance |
| Timeline |
| ABB |
| Dave Busters Enterta |
ABB and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB and Dave Busters
The main advantage of trading using opposite ABB and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.| ABB vs. Dave Busters Entertainment | ABB vs. CNVISION MEDIA | ABB vs. Southwest Airlines Co | ABB vs. JAPAN AIRLINES |
| Dave Busters vs. Starbucks | Dave Busters vs. Superior Plus Corp | Dave Busters vs. SIVERS SEMICONDUCTORS AB | Dave Busters 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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