Correlation Between CBIZ and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both CBIZ 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 CBIZ and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBIZ Inc and Rentokil Initial plc, you can compare the effects of market volatilities on CBIZ 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 CBIZ with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBIZ and Rentokil Initial.
Diversification Opportunities for CBIZ and Rentokil Initial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CBIZ and Rentokil is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CBIZ Inc 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 CBIZ 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 CBIZ Inc 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 CBIZ i.e., CBIZ and Rentokil Initial go up and down completely randomly.
Pair Corralation between CBIZ and Rentokil Initial
Considering the 90-day investment horizon CBIZ Inc is expected to generate 0.62 times more return on investment than Rentokil Initial. However, CBIZ Inc is 1.61 times less risky than Rentokil Initial. It trades about 0.06 of its potential returns per unit of risk. Rentokil Initial plc is currently generating about 0.02 per unit of risk. If you would invest 6,514 in CBIZ Inc on November 3, 2024 and sell it today you would earn a total of 2,067 from holding CBIZ Inc or generate 31.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.31% |
| Values | Daily Returns |
CBIZ Inc vs. Rentokil Initial plc
Performance |
| Timeline |
| CBIZ Inc |
| Rentokil Initial plc |
CBIZ and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBIZ and Rentokil Initial
The main advantage of trading using opposite CBIZ and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBIZ 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.The idea behind CBIZ Inc and Rentokil Initial plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Rentokil Initial vs. Maximus | Rentokil Initial vs. CBIZ Inc | Rentokil Initial vs. First Advantage Corp | Rentokil Initial vs. Network 1 Technologies |
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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