Correlation Between RENTOKIL INITIAL and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both RENTOKIL INITIAL and TRAINLINE PLC 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 TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RENTOKIL INITIAL ADR5 and TRAINLINE PLC LS, you can compare the effects of market volatilities on RENTOKIL INITIAL and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of RENTOKIL INITIAL and TRAINLINE PLC.
Diversification Opportunities for RENTOKIL INITIAL and TRAINLINE PLC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RENTOKIL and TRAINLINE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding RENTOKIL INITIAL ADR5 and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 ADR5 are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of RENTOKIL INITIAL i.e., RENTOKIL INITIAL and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between RENTOKIL INITIAL and TRAINLINE PLC
Assuming the 90 days horizon RENTOKIL INITIAL is expected to generate 4.36 times less return on investment than TRAINLINE PLC. But when comparing it to its historical volatility, RENTOKIL INITIAL ADR5 is 1.14 times less risky than TRAINLINE PLC. It trades about 0.02 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 398.00 in TRAINLINE PLC LS on October 26, 2024 and sell it today you would earn a total of 60.00 from holding TRAINLINE PLC LS or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RENTOKIL INITIAL ADR5 vs. TRAINLINE PLC LS
Performance |
| Timeline |
| RENTOKIL INITIAL ADR5 |
| TRAINLINE PLC LS |
RENTOKIL INITIAL and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RENTOKIL INITIAL and TRAINLINE PLC
The main advantage of trading using opposite RENTOKIL INITIAL and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RENTOKIL INITIAL position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.| RENTOKIL INITIAL vs. PICKN PAY STORES | RENTOKIL INITIAL vs. ecotel communication ag | RENTOKIL INITIAL vs. Highlight Communications AG | RENTOKIL INITIAL vs. Chunghwa Telecom Co |
| TRAINLINE PLC vs. TRIPCOM GROUP DL 00125 | TRAINLINE PLC vs. TRAVEL LEISURE DL 01 | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. MakeMyTrip Limited |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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