Correlation Between ABM Industries and Dolby Laboratories
Can any of the company-specific risk be diversified away by investing in both ABM Industries and Dolby Laboratories 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 Dolby Laboratories 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 Dolby Laboratories, you can compare the effects of market volatilities on ABM Industries and Dolby Laboratories 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 Dolby Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and Dolby Laboratories.
Diversification Opportunities for ABM Industries and Dolby Laboratories
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between ABM and Dolby is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and Dolby Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolby Laboratories 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 Dolby Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolby Laboratories has no effect on the direction of ABM Industries i.e., ABM Industries and Dolby Laboratories go up and down completely randomly.
Pair Corralation between ABM Industries and Dolby Laboratories
Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 1.2 times more return on investment than Dolby Laboratories. However, ABM Industries is 1.2 times more volatile than Dolby Laboratories. It trades about 0.02 of its potential returns per unit of risk. Dolby Laboratories is currently generating about 0.01 per unit of risk. If you would invest 4,658 in ABM Industries Incorporated on November 21, 2024 and sell it today you would earn a total of 580.00 from holding ABM Industries Incorporated or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ABM Industries Incorporated vs. Dolby Laboratories
Performance |
| Timeline |
| ABM Industries |
| Dolby Laboratories |
ABM Industries and Dolby Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABM Industries and Dolby Laboratories
The main advantage of trading using opposite ABM Industries and Dolby Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABM Industries position performs unexpectedly, Dolby Laboratories 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 Dolby Laboratories will offset losses from the drop in Dolby Laboratories' long position.| ABM Industries vs. Cass Information Systems | ABM Industries vs. First Advantage Corp | ABM Industries vs. Rentokil Initial PLC | ABM Industries vs. CBIZ Inc |
| Dolby Laboratories vs. Maximus | Dolby Laboratories vs. Network 1 Technologies | Dolby Laboratories vs. First Advantage Corp | Dolby Laboratories vs. BrightView Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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