Correlation Between Rentokil Initial and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on Rentokil Initial and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Automatic Data.
Diversification Opportunities for Rentokil Initial and Automatic Data
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rentokil and Automatic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Automatic Data go up and down completely randomly.
Pair Corralation between Rentokil Initial and Automatic Data
Considering the 90-day investment horizon Rentokil Initial is expected to generate 9.28 times less return on investment than Automatic Data. In addition to that, Rentokil Initial is 2.85 times more volatile than Automatic Data Processing. It trades about 0.01 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.14 per unit of volatility. If you would invest 22,387 in Automatic Data Processing on August 24, 2024 and sell it today you would earn a total of 8,172 from holding Automatic Data Processing or generate 36.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rentokil Initial PLC vs. Automatic Data Processing
Performance |
| Timeline |
| Rentokil Initial PLC |
| Automatic Data Processing |
Rentokil Initial and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Automatic Data
The main advantage of trading using opposite Rentokil Initial and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Rentokil Initial vs. First Advantage Corp | Rentokil Initial vs. Civeo Corp | Rentokil Initial vs. Performant Financial | Rentokil Initial vs. Network 1 Technologies |
| Automatic Data vs. Robert Half International | Automatic Data vs. Barrett Business Services | Automatic Data vs. ManpowerGroup | Automatic Data vs. Kforce Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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