Correlation Between Rentokil Initial and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Asbury Automotive 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 Asbury Automotive 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 Asbury Automotive Group, you can compare the effects of market volatilities on Rentokil Initial and Asbury Automotive 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 Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Asbury Automotive.
Diversification Opportunities for Rentokil Initial and Asbury Automotive
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rentokil and Asbury is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive 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 Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Asbury Automotive go up and down completely randomly.
Pair Corralation between Rentokil Initial and Asbury Automotive
If you would invest 21,219 in Asbury Automotive Group on September 14, 2024 and sell it today you would earn a total of 4,153 from holding Asbury Automotive Group or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.37% |
| Values | Daily Returns |
Rentokil Initial PLC vs. Asbury Automotive Group
Performance |
| Timeline |
| Rentokil Initial PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Asbury Automotive |
Rentokil Initial and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Asbury Automotive
The main advantage of trading using opposite Rentokil Initial and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Rentokil Initial vs. Asbury Automotive Group | Rentokil Initial vs. Aldel Financial II | Rentokil Initial vs. Jacobs Solutions | Rentokil Initial vs. Meiwu Technology Co |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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