Correlation Between Wilhelmina and ABM Industries

Can any of the company-specific risk be diversified away by investing in both Wilhelmina 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 Wilhelmina and ABM Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wilhelmina and ABM Industries Incorporated, you can compare the effects of market volatilities on Wilhelmina 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 Wilhelmina with a short position of ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilhelmina and ABM Industries.

Diversification Opportunities for Wilhelmina and ABM Industries

0.0

Correlation Coefficient

Wilhelmina  ABM Industries

Pay attention - limited upside

The 3 months correlation between Wilhelmina and ABM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries and Wilhelmina 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 Wilhelmina 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 Wilhelmina i.e., Wilhelmina and ABM Industries go up and down completely randomly.

Pair Corralation between Wilhelmina and ABM Industries

If you would invest  4,643  in ABM Industries Incorporated on November 20, 2024 and sell it today you would earn a total of  649.00  from holding ABM Industries Incorporated or generate 13.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Wilhelmina  vs.  ABM Industries Incorporated

Wilhelmina

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Wilhelmina and ABM Industries

The main advantage of trading using opposite Wilhelmina and ABM Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilhelmina 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 Wilhelmina 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.