Correlation Between ALJ Regional and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both ALJ Regional 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 ALJ Regional and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALJ Regional Holdings and Rentokil Initial PLC, you can compare the effects of market volatilities on ALJ Regional 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 ALJ Regional with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALJ Regional and Rentokil Initial.
Diversification Opportunities for ALJ Regional and Rentokil Initial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ALJ and Rentokil is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ALJ Regional Holdings and Rentokil Initial PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rentokil Initial PLC and ALJ Regional 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 ALJ Regional Holdings 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 PLC has no effect on the direction of ALJ Regional i.e., ALJ Regional and Rentokil Initial go up and down completely randomly.
Pair Corralation between ALJ Regional and Rentokil Initial
If you would invest 2,555 in Rentokil Initial PLC on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Rentokil Initial PLC or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
ALJ Regional Holdings vs. Rentokil Initial PLC
Performance |
| Timeline |
| ALJ Regional Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Rentokil Initial PLC |
ALJ Regional and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALJ Regional and Rentokil Initial
The main advantage of trading using opposite ALJ Regional and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALJ Regional 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.| ALJ Regional vs. Dexterra Group | ALJ Regional vs. Intertek Group Plc | ALJ Regional vs. Wildpack Beverage | ALJ Regional vs. DATA Communications Management |
| Rentokil Initial vs. Cass Information Systems | Rentokil Initial vs. First Advantage Corp | Rentokil Initial vs. CBIZ Inc | Rentokil Initial vs. Civeo Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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