Correlation Between ABM Industries and Mistras

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

Diversification Opportunities for ABM Industries and Mistras

-0.44

Correlation Coefficient

ABM Industries  Mistras

Very good diversification

The 3 months correlation between ABM and Mistras is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group 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 Mistras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mistras Group has no effect on the direction of ABM Industries i.e., ABM Industries and Mistras go up and down completely randomly.

Pair Corralation between ABM Industries and Mistras

Considering the 90-day investment horizon ABM Industries is expected to generate 1.33 times less return on investment than Mistras. But when comparing it to its historical volatility, ABM Industries Incorporated is 1.5 times less risky than Mistras. It trades about 0.24 of its potential returns per unit of risk. Mistras Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Mistras Group on September 1, 2024 and sell it today you would earn a total of  86.00  from holding Mistras Group or generate 10.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ABM Industries Incorporated  vs.  Mistras Group

ABM Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABM Industries Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, ABM Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ABM Industries and Mistras

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

The idea behind ABM Industries Incorporated and Mistras Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.