Correlation Between Rentokil Initial and Maximus

Can any of the company-specific risk be diversified away by investing in both Rentokil Initial and Maximus 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 Maximus 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 Maximus, you can compare the effects of market volatilities on Rentokil Initial and Maximus 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 Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Maximus.

Diversification Opportunities for Rentokil Initial and Maximus

0.33

Correlation Coefficient

Rentokil Initial  Maximus

Weak diversification

The 3 months correlation between Rentokil and Maximus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial plc and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus 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 Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Maximus go up and down completely randomly.

Pair Corralation between Rentokil Initial and Maximus

Assuming the 90 days horizon Rentokil Initial plc is expected to generate 1.54 times more return on investment than Maximus. However, Rentokil Initial is 1.54 times more volatile than Maximus. It trades about 0.07 of its potential returns per unit of risk. Maximus is currently generating about -0.06 per unit of risk. If you would invest  430.00  in Rentokil Initial plc on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Rentokil Initial plc or generate 9.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

Rentokil Initial plc  vs.  Maximus

Rentokil Initial plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rentokil Initial plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Rentokil Initial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rentokil Initial and Maximus

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

The idea behind Rentokil Initial plc and Maximus 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.