Correlation Between Rentokil Initial and Casella Waste
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Casella Waste 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 Casella Waste 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 Casella Waste Systems, you can compare the effects of market volatilities on Rentokil Initial and Casella Waste 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 Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Casella Waste.
Diversification Opportunities for Rentokil Initial and Casella Waste
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rentokil and Casella is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems 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 Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Casella Waste go up and down completely randomly.
Pair Corralation between Rentokil Initial and Casella Waste
Considering the 90-day investment horizon Rentokil Initial PLC is expected to generate 1.5 times more return on investment than Casella Waste. However, Rentokil Initial is 1.5 times more volatile than Casella Waste Systems. It trades about 0.09 of its potential returns per unit of risk. Casella Waste Systems is currently generating about -0.03 per unit of risk. If you would invest 2,562 in Rentokil Initial PLC on September 15, 2024 and sell it today you would earn a total of 73.00 from holding Rentokil Initial PLC or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rentokil Initial PLC vs. Casella Waste Systems
Performance |
| Timeline |
| Rentokil Initial PLC |
| Casella Waste Systems |
Rentokil Initial and Casella Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Casella Waste
The main advantage of trading using opposite Rentokil Initial and Casella Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Casella Waste 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 Casella Waste will offset losses from the drop in Casella Waste's long position.| Rentokil Initial vs. Casella Waste Systems | Rentokil Initial vs. Montrose Environmental Grp | Rentokil Initial vs. LanzaTech Global | Rentokil Initial vs. Waste Connections |
| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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