Correlation Between ABACUS STORAGE and Mayfield Childcare

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

By analyzing existing cross correlation between ABACUS STORAGE KING and Mayfield Childcare, you can compare the effects of market volatilities on ABACUS STORAGE and Mayfield Childcare 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 ABACUS STORAGE with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Mayfield Childcare.

Diversification Opportunities for ABACUS STORAGE and Mayfield Childcare

0.43

Correlation Coefficient

ABACUS STORAGE  Mayfield Childcare

Very weak diversification

The 3 months correlation between ABACUS and Mayfield is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Mayfield Childcare go up and down completely randomly.

Pair Corralation between ABACUS STORAGE and Mayfield Childcare

Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to under-perform the Mayfield Childcare. But the stock apears to be less risky and, when comparing its historical volatility, ABACUS STORAGE KING is 1.5 times less risky than Mayfield Childcare. The stock trades about -0.15 of its potential returns per unit of risk. The Mayfield Childcare is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Mayfield Childcare on September 19, 2024 and sell it today you would lose (7.00) from holding Mayfield Childcare or give up 12.5% of portfolio value over 90 days.

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

ABACUS STORAGE KING  vs.  Mayfield Childcare

ABACUS STORAGE KING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABACUS STORAGE KING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mayfield Childcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfield Childcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ABACUS STORAGE and Mayfield Childcare

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

The idea behind ABACUS STORAGE KING and Mayfield Childcare 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.