Correlation Between Rentokil Initial and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Newpark Resources 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 Newpark Resources 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 Newpark Resources, you can compare the effects of market volatilities on Rentokil Initial and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Newpark Resources.
Diversification Opportunities for Rentokil Initial and Newpark Resources
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rentokil and Newpark is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Newpark Resources go up and down completely randomly.
Pair Corralation between Rentokil Initial and Newpark Resources
If you would invest 487.00 in Newpark Resources on September 4, 2024 and sell it today you would earn a total of 352.00 from holding Newpark Resources or generate 72.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.21% |
| Values | Daily Returns |
Rentokil Initial PLC vs. Newpark Resources
Performance |
| Timeline |
| Rentokil Initial PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Newpark Resources |
Rentokil Initial and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Newpark Resources
The main advantage of trading using opposite Rentokil Initial and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| Rentokil Initial vs. SunOpta | Rentokil Initial vs. Hf Foods Group | Rentokil Initial vs. Skillful Craftsman Education | Rentokil Initial vs. Scholastic |
| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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