Correlation Between Equifax and Rollins
Can any of the company-specific risk be diversified away by investing in both Equifax and Rollins 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 Equifax and Rollins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and Rollins, you can compare the effects of market volatilities on Equifax and Rollins 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 Equifax with a short position of Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and Rollins.
Diversification Opportunities for Equifax and Rollins
Good diversification
The 3 months correlation between Equifax and Rollins is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and Equifax 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 Equifax are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Equifax i.e., Equifax and Rollins go up and down completely randomly.
Pair Corralation between Equifax and Rollins
Assuming the 90 days horizon Equifax is expected to under-perform the Rollins. But the stock apears to be less risky and, when comparing its historical volatility, Equifax is 1.16 times less risky than Rollins. The stock trades about -0.18 of its potential returns per unit of risk. The Rollins is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,591 in Rollins on August 24, 2024 and sell it today you would earn a total of 67.00 from holding Rollins or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Equifax vs. Rollins
Performance |
| Timeline |
| Equifax |
| Rollins |
Equifax and Rollins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and Rollins
The main advantage of trading using opposite Equifax and Rollins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax position performs unexpectedly, Rollins 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 Rollins will offset losses from the drop in Rollins' long position.| Equifax vs. Taiwan Semiconductor Manufacturing | Equifax vs. MagnaChip Semiconductor Corp | Equifax vs. Corporate Travel Management | Equifax vs. Jacquet Metal Service |
| Rollins vs. Haier Smart Home | Rollins vs. Corporate Office Properties | Rollins vs. Hisense Home Appliances | Rollins vs. Beazer Homes USA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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