Correlation Between SMX Public and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both SMX Public and Rentokil Initial 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 SMX Public and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMX Public Limited and Rentokil Initial plc, you can compare the effects of market volatilities on SMX Public and Rentokil Initial 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 SMX Public with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMX Public and Rentokil Initial.
Diversification Opportunities for SMX Public and Rentokil Initial
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMX and Rentokil is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited and Rentokil Initial plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rentokil Initial plc and SMX Public 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 SMX Public Limited are associated (or correlated) with Rentokil Initial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rentokil Initial plc has no effect on the direction of SMX Public i.e., SMX Public and Rentokil Initial go up and down completely randomly.
Pair Corralation between SMX Public and Rentokil Initial
Considering the 90-day investment horizon SMX Public Limited is expected to generate 11.24 times more return on investment than Rentokil Initial. However, SMX Public is 11.24 times more volatile than Rentokil Initial plc. It trades about 0.08 of its potential returns per unit of risk. Rentokil Initial plc is currently generating about -0.1 per unit of risk. If you would invest 621.00 in SMX Public Limited on October 25, 2024 and sell it today you would lose (176.00) from holding SMX Public Limited or give up 28.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
SMX Public Limited vs. Rentokil Initial plc
Performance |
| Timeline |
| SMX Public Limited |
| Rentokil Initial plc |
SMX Public and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMX Public and Rentokil Initial
The main advantage of trading using opposite SMX Public and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public position performs unexpectedly, Rentokil Initial 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 Rentokil Initial will offset losses from the drop in Rentokil Initial's long position.| SMX Public vs. Team Inc | SMX Public vs. Lichen China Limited | SMX Public vs. System1 | SMX Public vs. Eastman Kodak Co |
| Rentokil Initial vs. Maximus | Rentokil Initial vs. CBIZ Inc | Rentokil Initial vs. First Advantage Corp | Rentokil Initial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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