Correlation Between Armada Hflr and RENTOKIL INITIAL
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and RENTOKIL INITIAL 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 Armada Hflr and RENTOKIL INITIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and RENTOKIL INITIAL ADR5, you can compare the effects of market volatilities on Armada Hflr and RENTOKIL INITIAL 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 Armada Hflr with a short position of RENTOKIL INITIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and RENTOKIL INITIAL.
Diversification Opportunities for Armada Hflr and RENTOKIL INITIAL
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armada and RENTOKIL is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and RENTOKIL INITIAL ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENTOKIL INITIAL ADR5 and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with RENTOKIL INITIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENTOKIL INITIAL ADR5 has no effect on the direction of Armada Hflr i.e., Armada Hflr and RENTOKIL INITIAL go up and down completely randomly.
Pair Corralation between Armada Hflr and RENTOKIL INITIAL
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the RENTOKIL INITIAL. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.48 times less risky than RENTOKIL INITIAL. The stock trades about -0.29 of its potential returns per unit of risk. The RENTOKIL INITIAL ADR5 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,420 in RENTOKIL INITIAL ADR5 on September 23, 2024 and sell it today you would lose (40.00) from holding RENTOKIL INITIAL ADR5 or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Armada Hflr Pr vs. RENTOKIL INITIAL ADR5
Performance |
| Timeline |
| Armada Hflr Pr |
| RENTOKIL INITIAL ADR5 |
Armada Hflr and RENTOKIL INITIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and RENTOKIL INITIAL
The main advantage of trading using opposite Armada Hflr and RENTOKIL INITIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, RENTOKIL INITIAL 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 RENTOKIL INITIAL will offset losses from the drop in RENTOKIL INITIAL's long position.| Armada Hflr vs. Modiv Inc | Armada Hflr vs. Precinct Properties New | Armada Hflr vs. Global Net Lease | Armada Hflr vs. NexPoint Diversified Real |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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