Correlation Between Cass Information and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both Cass Information 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 Cass Information and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and Rentokil Initial PLC, you can compare the effects of market volatilities on Cass Information 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 Cass Information with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Rentokil Initial.
Diversification Opportunities for Cass Information and Rentokil Initial
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cass and Rentokil is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems 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 Cass Information 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 Cass Information Systems 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 Cass Information i.e., Cass Information and Rentokil Initial go up and down completely randomly.
Pair Corralation between Cass Information and Rentokil Initial
Given the investment horizon of 90 days Cass Information Systems is expected to generate 1.46 times more return on investment than Rentokil Initial. However, Cass Information is 1.46 times more volatile than Rentokil Initial PLC. It trades about 0.15 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.11 per unit of risk. If you would invest 4,154 in Cass Information Systems on August 24, 2024 and sell it today you would earn a total of 276.00 from holding Cass Information Systems or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Rentokil Initial PLC
Performance |
| Timeline |
| Cass Information Systems |
| Rentokil Initial PLC |
Cass Information and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Rentokil Initial
The main advantage of trading using opposite Cass Information and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information 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.| Cass Information vs. First Advantage Corp | Cass Information vs. Rentokil Initial PLC | Cass Information vs. CBIZ Inc | Cass Information vs. Civeo Corp |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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