Correlation Between ABM Industries and Aqua Metals
Can any of the company-specific risk be diversified away by investing in both ABM Industries and Aqua Metals 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 ABM Industries and Aqua Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABM Industries Incorporated and Aqua Metals, you can compare the effects of market volatilities on ABM Industries and Aqua Metals 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 ABM Industries with a short position of Aqua Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and Aqua Metals.
Diversification Opportunities for ABM Industries and Aqua Metals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ABM and Aqua is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and ABM Industries 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 ABM Industries Incorporated are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of ABM Industries i.e., ABM Industries and Aqua Metals go up and down completely randomly.
Pair Corralation between ABM Industries and Aqua Metals
Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 0.24 times more return on investment than Aqua Metals. However, ABM Industries Incorporated is 4.2 times less risky than Aqua Metals. It trades about 0.1 of its potential returns per unit of risk. Aqua Metals is currently generating about -0.1 per unit of risk. If you would invest 4,713 in ABM Industries Incorporated on August 31, 2024 and sell it today you would earn a total of 1,004 from holding ABM Industries Incorporated or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABM Industries Incorporated vs. Aqua Metals
Performance |
| Timeline |
| ABM Industries |
| Aqua Metals |
ABM Industries and Aqua Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABM Industries and Aqua Metals
The main advantage of trading using opposite ABM Industries and Aqua Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABM Industries position performs unexpectedly, Aqua Metals 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 Aqua Metals will offset losses from the drop in Aqua Metals' long position.| ABM Industries vs. Network 1 Technologies | ABM Industries vs. Wilhelmina | ABM Industries vs. Mader Group Limited | ABM Industries vs. First Advantage Corp |
| Aqua Metals vs. LanzaTech Global | Aqua Metals vs. Waste Management | Aqua Metals vs. Clean Harbors | Aqua Metals vs. Casella Waste Systems |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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