Correlation Between ASGN and ABM Industries
Can any of the company-specific risk be diversified away by investing in both ASGN 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 ASGN and ABM Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASGN Inc and ABM Industries Incorporated, you can compare the effects of market volatilities on ASGN 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 ASGN with a short position of ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASGN and ABM Industries.
Diversification Opportunities for ASGN and ABM Industries
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASGN and ABM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ASGN Inc and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries and ASGN 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 ASGN Inc 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 ASGN i.e., ASGN and ABM Industries go up and down completely randomly.
Pair Corralation between ASGN and ABM Industries
Given the investment horizon of 90 days ASGN Inc is expected to under-perform the ABM Industries. But the stock apears to be less risky and, when comparing its historical volatility, ASGN Inc is 1.21 times less risky than ABM Industries. The stock trades about -0.27 of its potential returns per unit of risk. The ABM Industries Incorporated is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,591 in ABM Industries Incorporated on March 11, 2024 and sell it today you would earn a total of 503.00 from holding ABM Industries Incorporated or generate 10.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ASGN Inc vs. ABM Industries Incorporated
Performance |
Timeline |
ASGN Inc |
ABM Industries |
ASGN and ABM Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASGN and ABM Industries
The main advantage of trading using opposite ASGN and ABM Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASGN 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.ASGN vs. CACI International | ASGN vs. CDW Corp | ASGN vs. Jack Henry Associates | ASGN vs. ExlService Holdings |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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