Correlation Between Casella Waste and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both Casella Waste 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 Casella Waste and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casella Waste Systems and Rentokil Initial PLC, you can compare the effects of market volatilities on Casella Waste 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 Casella Waste with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casella Waste and Rentokil Initial.
Diversification Opportunities for Casella Waste and Rentokil Initial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Casella and Rentokil is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste 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 Casella Waste 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 Casella Waste 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 Casella Waste i.e., Casella Waste and Rentokil Initial go up and down completely randomly.
Pair Corralation between Casella Waste and Rentokil Initial
Given the investment horizon of 90 days Casella Waste Systems is expected to generate 0.52 times more return on investment than Rentokil Initial. However, Casella Waste Systems is 1.91 times less risky than Rentokil Initial. It trades about 0.08 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.0 per unit of risk. If you would invest 8,055 in Casella Waste Systems on September 15, 2024 and sell it today you would earn a total of 2,551 from holding Casella Waste Systems or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Casella Waste Systems vs. Rentokil Initial PLC
Performance |
| Timeline |
| Casella Waste Systems |
| Rentokil Initial PLC |
Casella Waste and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casella Waste and Rentokil Initial
The main advantage of trading using opposite Casella Waste and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casella Waste 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.| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
| Rentokil Initial vs. Casella Waste Systems | Rentokil Initial vs. Montrose Environmental Grp | Rentokil Initial vs. LanzaTech Global | Rentokil Initial vs. Waste Connections |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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