Correlation Between Rentokil Initial and CBIZ
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and CBIZ 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 CBIZ 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 CBIZ Inc, you can compare the effects of market volatilities on Rentokil Initial and CBIZ 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 CBIZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and CBIZ.
Diversification Opportunities for Rentokil Initial and CBIZ
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rentokil and CBIZ is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ 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 PLC are associated (or correlated) with CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and CBIZ go up and down completely randomly.
Pair Corralation between Rentokil Initial and CBIZ
Considering the 90-day investment horizon Rentokil Initial is expected to generate 5.59 times less return on investment than CBIZ. But when comparing it to its historical volatility, Rentokil Initial PLC is 1.6 times less risky than CBIZ. It trades about 0.11 of its potential returns per unit of risk. CBIZ Inc is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 6,598 in CBIZ Inc on August 24, 2024 and sell it today you would earn a total of 1,345 from holding CBIZ Inc or generate 20.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rentokil Initial PLC vs. CBIZ Inc
Performance |
| Timeline |
| Rentokil Initial PLC |
| CBIZ Inc |
Rentokil Initial and CBIZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and CBIZ
The main advantage of trading using opposite Rentokil Initial and CBIZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, CBIZ 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 CBIZ will offset losses from the drop in CBIZ's long position.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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