Correlation Between Mayfield Childcare and ABACUS STORAGE

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

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

Diversification Opportunities for Mayfield Childcare and ABACUS STORAGE

0.43

Correlation Coefficient

Mayfield Childcare  ABACUS STORAGE

Very weak diversification

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

Pair Corralation between Mayfield Childcare and ABACUS STORAGE

Assuming the 90 days trading horizon Mayfield Childcare is expected to generate 1.5 times more return on investment than ABACUS STORAGE. However, Mayfield Childcare is 1.5 times more volatile than ABACUS STORAGE KING. It trades about -0.09 of its potential returns per unit of risk. ABACUS STORAGE KING is currently generating about -0.15 per unit of risk. 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

Mayfield Childcare  vs.  ABACUS STORAGE KING

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.

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.

Pair Trading with Mayfield Childcare and ABACUS STORAGE

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

The idea behind Mayfield Childcare and ABACUS STORAGE KING 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.