Correlation Between CRA International and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both CRA International 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 CRA International and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRA International and Rentokil Initial PLC, you can compare the effects of market volatilities on CRA International 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 CRA International with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and Rentokil Initial.
Diversification Opportunities for CRA International and Rentokil Initial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CRA and Rentokil is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CRA International 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 CRA International 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 CRA International 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 CRA International i.e., CRA International and Rentokil Initial go up and down completely randomly.
Pair Corralation between CRA International and Rentokil Initial
Given the investment horizon of 90 days CRA International is expected to generate 2.27 times less return on investment than Rentokil Initial. In addition to that, CRA International is 1.96 times more volatile than Rentokil Initial PLC. It trades about 0.02 of its total potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.07 per unit of volatility. If you would invest 2,518 in Rentokil Initial PLC on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Rentokil Initial PLC or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CRA International vs. Rentokil Initial PLC
Performance |
| Timeline |
| CRA International |
| Rentokil Initial PLC |
CRA International and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRA International and Rentokil Initial
The main advantage of trading using opposite CRA International and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRA International 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.| CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
| Rentokil Initial vs. Network 1 Technologies | Rentokil Initial vs. Wilhelmina | Rentokil Initial vs. Mader Group Limited | Rentokil Initial vs. First Advantage 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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