Correlation Between Jacobs Solutions and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both Jacobs Solutions 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 Jacobs Solutions and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacobs Solutions and Rentokil Initial PLC, you can compare the effects of market volatilities on Jacobs Solutions 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 Jacobs Solutions with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacobs Solutions and Rentokil Initial.
Diversification Opportunities for Jacobs Solutions and Rentokil Initial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jacobs and Rentokil is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions i.e., Jacobs Solutions and Rentokil Initial go up and down completely randomly.
Pair Corralation between Jacobs Solutions and Rentokil Initial
Taking into account the 90-day investment horizon Jacobs Solutions is expected to generate 0.49 times more return on investment than Rentokil Initial. However, Jacobs Solutions is 2.03 times less risky than Rentokil Initial. It trades about 0.15 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about -0.09 per unit of risk. If you would invest 12,261 in Jacobs Solutions on September 2, 2024 and sell it today you would earn a total of 1,862 from holding Jacobs Solutions or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacobs Solutions vs. Rentokil Initial PLC
Performance |
| Timeline |
| Jacobs Solutions |
| Rentokil Initial PLC |
Jacobs Solutions and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacobs Solutions and Rentokil Initial
The main advantage of trading using opposite Jacobs Solutions and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions 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.| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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