Correlation Between RB Global and ABM Industries
Can any of the company-specific risk be diversified away by investing in both RB Global 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 RB Global and ABM Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Global and ABM Industries Incorporated, you can compare the effects of market volatilities on RB Global 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 RB Global with a short position of ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Global and ABM Industries.
Diversification Opportunities for RB Global and ABM Industries
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RBA and ABM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries and RB Global 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 RB Global 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 RB Global i.e., RB Global and ABM Industries go up and down completely randomly.
Pair Corralation between RB Global and ABM Industries
Considering the 90-day investment horizon RB Global is expected to generate 0.93 times more return on investment than ABM Industries. However, RB Global is 1.08 times less risky than ABM Industries. It trades about 0.08 of its potential returns per unit of risk. ABM Industries Incorporated is currently generating about 0.04 per unit of risk. If you would invest 5,374 in RB Global on September 2, 2024 and sell it today you would earn a total of 4,402 from holding RB Global or generate 81.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Global vs. ABM Industries Incorporated
Performance |
| Timeline |
| RB Global |
| ABM Industries |
RB Global and ABM Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Global and ABM Industries
The main advantage of trading using opposite RB Global and ABM Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Global 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.The idea behind RB Global and ABM Industries Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ABM Industries vs. CRA International | ABM Industries vs. ICF International | ABM Industries vs. Forrester Research | ABM Industries vs. Huron Consulting Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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