Correlation Between ABM Industries and CBIZ

Can any of the company-specific risk be diversified away by investing in both ABM Industries and CBIZ 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 CBIZ 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 CBIZ Inc, you can compare the effects of market volatilities on ABM Industries and CBIZ 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 CBIZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and CBIZ.

Diversification Opportunities for ABM Industries and CBIZ

-0.29

Correlation Coefficient

ABM Industries  CBIZ

Very good diversification

The 3 months correlation between ABM and CBIZ is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc 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 CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of ABM Industries i.e., ABM Industries and CBIZ go up and down completely randomly.

Pair Corralation between ABM Industries and CBIZ

Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 0.54 times more return on investment than CBIZ. However, ABM Industries Incorporated is 1.84 times less risky than CBIZ. It trades about 0.13 of its potential returns per unit of risk. CBIZ Inc is currently generating about -0.19 per unit of risk. If you would invest  5,285  in ABM Industries Incorporated on November 29, 2024 and sell it today you would earn a total of  129.00  from holding ABM Industries Incorporated or generate 2.44% 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.  CBIZ Inc

ABM Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABM Industries Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, ABM Industries is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

CBIZ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBIZ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, CBIZ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ABM Industries and CBIZ

The main advantage of trading using opposite ABM Industries and CBIZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABM Industries position performs unexpectedly, CBIZ 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 CBIZ will offset losses from the drop in CBIZ's long position.

The idea behind ABM Industries Incorporated and CBIZ Inc 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.