Correlation Between RENTOKIL INITIAL and RELO GROUP
Can any of the company-specific risk be diversified away by investing in both RENTOKIL INITIAL and RELO GROUP 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 RELO GROUP 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 RELO GROUP INC, you can compare the effects of market volatilities on RENTOKIL INITIAL and RELO GROUP 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 RELO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of RENTOKIL INITIAL and RELO GROUP.
Diversification Opportunities for RENTOKIL INITIAL and RELO GROUP
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RENTOKIL and RELO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding RENTOKIL INITIAL ADR5 and RELO GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELO GROUP INC 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 RELO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELO GROUP INC has no effect on the direction of RENTOKIL INITIAL i.e., RENTOKIL INITIAL and RELO GROUP go up and down completely randomly.
Pair Corralation between RENTOKIL INITIAL and RELO GROUP
Assuming the 90 days horizon RENTOKIL INITIAL ADR5 is expected to generate 1.24 times more return on investment than RELO GROUP. However, RENTOKIL INITIAL is 1.24 times more volatile than RELO GROUP INC. It trades about 0.01 of its potential returns per unit of risk. RELO GROUP INC is currently generating about -0.01 per unit of risk. If you would invest 2,659 in RENTOKIL INITIAL ADR5 on September 23, 2024 and sell it today you would lose (279.00) from holding RENTOKIL INITIAL ADR5 or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RENTOKIL INITIAL ADR5 vs. RELO GROUP INC
Performance |
| Timeline |
| RENTOKIL INITIAL ADR5 |
| RELO GROUP INC |
RENTOKIL INITIAL and RELO GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RENTOKIL INITIAL and RELO GROUP
The main advantage of trading using opposite RENTOKIL INITIAL and RELO GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RENTOKIL INITIAL position performs unexpectedly, RELO GROUP 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 RELO GROUP will offset losses from the drop in RELO GROUP's long position.| RENTOKIL INITIAL vs. Cintas | RENTOKIL INITIAL vs. INPOST SA EO | RENTOKIL INITIAL vs. Elis SA | RENTOKIL INITIAL vs. PARK24 LTD |
| RELO GROUP vs. Cintas | RELO GROUP vs. RENTOKIL INITIAL ADR5 | RELO GROUP vs. INPOST SA EO | RELO GROUP vs. Elis SA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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