Correlation Between Global Payments and ABM Industries

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

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

Diversification Opportunities for Global Payments and ABM Industries

-0.04

Correlation Coefficient

Global Payments  ABM Industries

Good diversification

The 3 months correlation between Global and ABM is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries and Global Payments 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 Global Payments 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 Global Payments i.e., Global Payments and ABM Industries go up and down completely randomly.

Pair Corralation between Global Payments and ABM Industries

Considering the 90-day investment horizon Global Payments is expected to generate 1.08 times more return on investment than ABM Industries. However, Global Payments is 1.08 times more volatile than ABM Industries Incorporated. It trades about 0.0 of its potential returns per unit of risk. ABM Industries Incorporated is currently generating about -0.06 per unit of risk. If you would invest  7,903  in Global Payments on May 6, 2025 and sell it today you would lose (99.00) from holding Global Payments or give up 1.25% of portfolio value over 90 days.

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

Global Payments  vs.  ABM Industries Incorporated

Global Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Payments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Payments 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 latest uncertain performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Global Payments and ABM Industries

The main advantage of trading using opposite Global Payments and ABM Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Payments 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 Global Payments 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.