Correlation Between Rentokil Initial and All American
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and All American 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 Rentokil Initial and All American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rentokil Initial plc and All American Pet, you can compare the effects of market volatilities on Rentokil Initial and All American 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 Rentokil Initial with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and All American.
Diversification Opportunities for Rentokil Initial and All American
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rentokil and All is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial plc and All American Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Pet and Rentokil Initial 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 Rentokil Initial plc are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Pet has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and All American go up and down completely randomly.
Pair Corralation between Rentokil Initial and All American
Assuming the 90 days horizon Rentokil Initial is expected to generate 1857.58 times less return on investment than All American. But when comparing it to its historical volatility, Rentokil Initial plc is 247.62 times less risky than All American. It trades about 0.03 of its potential returns per unit of risk. All American Pet is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 0.01 in All American Pet on October 9, 2024 and sell it today you would earn a total of 0.00 from holding All American Pet or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rentokil Initial plc vs. All American Pet
Performance |
| Timeline |
| Rentokil Initial plc |
| All American Pet |
Rentokil Initial and All American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and All American
The main advantage of trading using opposite Rentokil Initial and All American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, All American 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 All American will offset losses from the drop in All American's long position.| Rentokil Initial vs. All American Pet | Rentokil Initial vs. Discount Print USA | Rentokil Initial vs. SMX Public Limited | Rentokil Initial vs. Frontera Group |
| All American vs. International Consolidated Companies | All American vs. Frontera Group | All American vs. XCPCNL Business Services | All American vs. Aramark Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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