Correlation Between BrightView Holdings and Rentokil Initial

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

By analyzing existing cross correlation between BrightView Holdings and Rentokil Initial PLC, you can compare the effects of market volatilities on BrightView Holdings 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 BrightView Holdings with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightView Holdings and Rentokil Initial.

Diversification Opportunities for BrightView Holdings and Rentokil Initial

0.43

Correlation Coefficient

BrightView Holdings  Rentokil Initial

Very weak diversification

The 3 months correlation between BrightView and Rentokil is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BrightView Holdings 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 BrightView Holdings 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 BrightView Holdings 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 BrightView Holdings i.e., BrightView Holdings and Rentokil Initial go up and down completely randomly.

Pair Corralation between BrightView Holdings and Rentokil Initial

Allowing for the 90-day total investment horizon BrightView Holdings is expected to under-perform the Rentokil Initial. In addition to that, BrightView Holdings is 1.02 times more volatile than Rentokil Initial PLC. It trades about -0.15 of its total potential returns per unit of risk. Rentokil Initial PLC is currently generating about -0.05 per unit of volatility. If you would invest  2,505  in Rentokil Initial PLC on December 30, 2024 and sell it today you would lose (216.00) from holding Rentokil Initial PLC or give up 8.62% of portfolio value over 90 days.

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

BrightView Holdings  vs.  Rentokil Initial PLC

BrightView Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightView Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Rentokil Initial PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rentokil Initial PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with BrightView Holdings and Rentokil Initial

The main advantage of trading using opposite BrightView Holdings and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrightView Holdings 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.

The idea behind BrightView Holdings and Rentokil Initial PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.