Correlation Between ABM Industries and Relx PLC
Can any of the company-specific risk be diversified away by investing in both ABM Industries and Relx PLC 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 Relx PLC 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 Relx PLC ADR, you can compare the effects of market volatilities on ABM Industries and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and Relx PLC.
Diversification Opportunities for ABM Industries and Relx PLC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABM and Relx is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of ABM Industries i.e., ABM Industries and Relx PLC go up and down completely randomly.
Pair Corralation between ABM Industries and Relx PLC
Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 1.17 times more return on investment than Relx PLC. However, ABM Industries is 1.17 times more volatile than Relx PLC ADR. It trades about 0.24 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.07 per unit of risk. If you would invest 5,306 in ABM Industries Incorporated on September 1, 2024 and sell it today you would earn a total of 411.00 from holding ABM Industries Incorporated or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABM Industries Incorporated vs. Relx PLC ADR
Performance |
| Timeline |
| ABM Industries |
| Relx PLC ADR |
ABM Industries and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABM Industries and Relx PLC
The main advantage of trading using opposite ABM Industries and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABM Industries position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| ABM Industries vs. CRA International | ABM Industries vs. ICF International | ABM Industries vs. Forrester Research | ABM Industries vs. Huron Consulting Group |
| Relx PLC vs. Maximus | Relx PLC vs. CBIZ Inc | Relx PLC vs. First Advantage Corp | Relx PLC vs. Network 1 Technologies |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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