Correlation Between Rentokil Initial and Unifirst
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Unifirst 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 Unifirst 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 Unifirst, you can compare the effects of market volatilities on Rentokil Initial and Unifirst 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 Unifirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Unifirst.
Diversification Opportunities for Rentokil Initial and Unifirst
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rentokil and Unifirst is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst 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 Unifirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifirst has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Unifirst go up and down completely randomly.
Pair Corralation between Rentokil Initial and Unifirst
Considering the 90-day investment horizon Rentokil Initial is expected to generate 1.25 times less return on investment than Unifirst. But when comparing it to its historical volatility, Rentokil Initial PLC is 1.38 times less risky than Unifirst. It trades about 0.12 of its potential returns per unit of risk. Unifirst is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,448 in Unifirst on November 9, 2024 and sell it today you would earn a total of 896.00 from holding Unifirst or generate 4.18% 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. Unifirst
Performance |
| Timeline |
| Rentokil Initial PLC |
| Unifirst |
Rentokil Initial and Unifirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Unifirst
The main advantage of trading using opposite Rentokil Initial and Unifirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Unifirst 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 Unifirst will offset losses from the drop in Unifirst'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 |
| Unifirst vs. AZZ Incorporated | Unifirst vs. BrightView Holdings | Unifirst vs. Maximus | Unifirst vs. Network 1 Technologies |
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.
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