Correlation Between Franklin Covey and Rentokil Initial

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

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

Diversification Opportunities for Franklin Covey and Rentokil Initial

-0.52

Correlation Coefficient

Franklin Covey  Rentokil Initial

Excellent diversification

The 3 months correlation between Franklin and Rentokil is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey 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 Franklin Covey 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 Franklin Covey 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 Franklin Covey i.e., Franklin Covey and Rentokil Initial go up and down completely randomly.

Pair Corralation between Franklin Covey and Rentokil Initial

Allowing for the 90-day total investment horizon Franklin Covey is expected to under-perform the Rentokil Initial. In addition to that, Franklin Covey is 1.98 times more volatile than Rentokil Initial PLC. It trades about -0.04 of its total potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.01 per unit of volatility. If you would invest  2,535  in Rentokil Initial PLC on October 1, 2024 and sell it today you would earn a total of  3.00  from holding Rentokil Initial PLC or generate 0.12% return on investment over 90 days.

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

Franklin Covey  vs.  Rentokil Initial PLC

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Rentokil Initial PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rentokil Initial PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Rentokil Initial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Franklin Covey and Rentokil Initial

The main advantage of trading using opposite Franklin Covey and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey 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 Franklin Covey 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.