Correlation Between AZZ Incorporated and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both AZZ Incorporated 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 AZZ Incorporated and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AZZ Incorporated and Rentokil Initial PLC, you can compare the effects of market volatilities on AZZ Incorporated 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 AZZ Incorporated with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AZZ Incorporated and Rentokil Initial.
Diversification Opportunities for AZZ Incorporated and Rentokil Initial
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between AZZ and Rentokil is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AZZ Incorporated 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 AZZ Incorporated 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 AZZ Incorporated 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 AZZ Incorporated i.e., AZZ Incorporated and Rentokil Initial go up and down completely randomly.
Pair Corralation between AZZ Incorporated and Rentokil Initial
Considering the 90-day investment horizon AZZ Incorporated is expected to generate 0.8 times more return on investment than Rentokil Initial. However, AZZ Incorporated is 1.25 times less risky than Rentokil Initial. It trades about 0.05 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.01 per unit of risk. If you would invest 8,463 in AZZ Incorporated on August 24, 2024 and sell it today you would earn a total of 1,078 from holding AZZ Incorporated or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AZZ Incorporated vs. Rentokil Initial PLC
Performance |
| Timeline |
| AZZ Incorporated |
| Rentokil Initial PLC |
AZZ Incorporated and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AZZ Incorporated and Rentokil Initial
The main advantage of trading using opposite AZZ Incorporated and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AZZ Incorporated 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.| AZZ Incorporated vs. Maximus | AZZ Incorporated vs. ABM Industries Incorporated | AZZ Incorporated vs. CBIZ Inc | AZZ Incorporated vs. Cass Information Systems |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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