Correlation Between Hillenbrand and ABM Industries
Can any of the company-specific risk be diversified away by investing in both Hillenbrand and ABM Industries 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 Hillenbrand and ABM Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and ABM Industries Incorporated, you can compare the effects of market volatilities on Hillenbrand and ABM Industries 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 Hillenbrand with a short position of ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and ABM Industries.
Diversification Opportunities for Hillenbrand and ABM Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hillenbrand and ABM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries and Hillenbrand 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 Hillenbrand are associated (or correlated) with ABM Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABM Industries has no effect on the direction of Hillenbrand i.e., Hillenbrand and ABM Industries go up and down completely randomly.
Pair Corralation between Hillenbrand and ABM Industries
Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the ABM Industries. In addition to that, Hillenbrand is 1.76 times more volatile than ABM Industries Incorporated. It trades about -0.05 of its total potential returns per unit of risk. ABM Industries Incorporated is currently generating about 0.12 per unit of volatility. If you would invest 4,074 in ABM Industries Incorporated on August 27, 2024 and sell it today you would earn a total of 1,605 from holding ABM Industries Incorporated or generate 39.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillenbrand vs. ABM Industries Incorporated
Performance |
| Timeline |
| Hillenbrand |
| ABM Industries |
Hillenbrand and ABM Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillenbrand and ABM Industries
The main advantage of trading using opposite Hillenbrand and ABM Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand position performs unexpectedly, ABM Industries 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 ABM Industries will offset losses from the drop in ABM Industries' long position.| Hillenbrand vs. Aquagold International | Hillenbrand vs. Morningstar Unconstrained Allocation | Hillenbrand vs. High Yield Municipal Fund | Hillenbrand vs. Thrivent High Yield |
| ABM Industries vs. Genpact Limited | ABM Industries vs. Broadridge Financial Solutions | ABM Industries vs. First Advantage Corp | ABM Industries vs. Franklin Covey |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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