Correlation Between Rentokil Initial and Aramark Holdings
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings, you can compare the effects of market volatilities on Rentokil Initial and Aramark Holdings 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 Aramark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Aramark Holdings.
Diversification Opportunities for Rentokil Initial and Aramark Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rentokil and Aramark is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings 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 Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Aramark Holdings go up and down completely randomly.
Pair Corralation between Rentokil Initial and Aramark Holdings
Considering the 90-day investment horizon Rentokil Initial PLC is expected to under-perform the Aramark Holdings. In addition to that, Rentokil Initial is 1.42 times more volatile than Aramark Holdings. It trades about -0.08 of its total potential returns per unit of risk. Aramark Holdings is currently generating about 0.01 per unit of volatility. If you would invest 3,217 in Aramark Holdings on March 2, 2024 and sell it today you would earn a total of 3.00 from holding Aramark Holdings or generate 0.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rentokil Initial PLC vs. Aramark Holdings
Performance |
Timeline |
Rentokil Initial PLC |
Aramark Holdings |
Rentokil Initial and Aramark Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rentokil Initial and Aramark Holdings
The main advantage of trading using opposite Rentokil Initial and Aramark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Aramark Holdings 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 Aramark Holdings will offset losses from the drop in Aramark Holdings' long position.Rentokil Initial vs. Discount Print USA | Rentokil Initial vs. Cass Information Systems | Rentokil Initial vs. Civeo Corp | Rentokil Initial vs. Network 1 Technologies |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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