Correlation Between Rentokil Initial and CompX International
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and CompX International 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 CompX International 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 CompX International, you can compare the effects of market volatilities on Rentokil Initial and CompX International 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 CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and CompX International.
Diversification Opportunities for Rentokil Initial and CompX International
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rentokil and CompX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International 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 CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and CompX International go up and down completely randomly.
Pair Corralation between Rentokil Initial and CompX International
Considering the 90-day investment horizon Rentokil Initial PLC is expected to under-perform the CompX International. But the stock apears to be less risky and, when comparing its historical volatility, Rentokil Initial PLC is 1.74 times less risky than CompX International. The stock trades about 0.0 of its potential returns per unit of risk. The CompX International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,541 in CompX International on August 31, 2024 and sell it today you would earn a total of 1,236 from holding CompX International or generate 80.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Rentokil Initial PLC vs. CompX International
Performance |
| Timeline |
| Rentokil Initial PLC |
| CompX International |
Rentokil Initial and CompX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and CompX International
The main advantage of trading using opposite Rentokil Initial and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, CompX International 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 CompX International will offset losses from the drop in CompX International's long position.| Rentokil Initial vs. Network 1 Technologies | Rentokil Initial vs. Wilhelmina | Rentokil Initial vs. Mader Group Limited | Rentokil Initial vs. First Advantage Corp |
| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |