Correlation Between Superior Plus and Rollins

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Rollins 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 Superior Plus and Rollins into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Rollins, you can compare the effects of market volatilities on Superior Plus and Rollins 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 Superior Plus with a short position of Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Rollins.

Diversification Opportunities for Superior Plus and Rollins

-0.05

Correlation Coefficient

Superior Plus  Rollins

Good diversification

The 3 months correlation between Superior and Rollins is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Superior Plus i.e., Superior Plus and Rollins go up and down completely randomly.

Pair Corralation between Superior Plus and Rollins

Assuming the 90 days horizon Superior Plus is expected to generate 4.03 times less return on investment than Rollins. In addition to that, Superior Plus is 2.36 times more volatile than Rollins. It trades about 0.01 of its total potential returns per unit of risk. Rollins is currently generating about 0.08 per unit of volatility. If you would invest  4,348  in Rollins on October 26, 2024 and sell it today you would earn a total of  292.00  from holding Rollins or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Superior Plus Corp  vs.  Rollins

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Rollins

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Rollins may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Superior Plus and Rollins

The main advantage of trading using opposite Superior Plus and Rollins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Rollins 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 Rollins will offset losses from the drop in Rollins' long position.

The idea behind Superior Plus Corp and Rollins pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.