Correlation Between Barnes and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Rentokil Initial PLC, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Rentokil Initial.
Diversification Opportunities for Barnes and Rentokil Initial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barnes and Rentokil is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group 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 Barnes 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 Barnes Group 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 Barnes i.e., Barnes and Rentokil Initial go up and down completely randomly.
Pair Corralation between Barnes and Rentokil Initial
Taking into account the 90-day investment horizon Barnes Group is expected to generate 1.01 times more return on investment than Rentokil Initial. However, Barnes is 1.01 times more volatile than Rentokil Initial PLC. It trades about 0.03 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 3,963 in Barnes Group on September 2, 2024 and sell it today you would earn a total of 721.00 from holding Barnes Group or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Rentokil Initial PLC
Performance |
| Timeline |
| Barnes Group |
| Rentokil Initial PLC |
Barnes and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Rentokil Initial
The main advantage of trading using opposite Barnes and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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