Correlation Between Rollins and Fiserv

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

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

Diversification Opportunities for Rollins and Fiserv

0.69

Correlation Coefficient

Rollins  Fiserv

Poor diversification

The 3 months correlation between Rollins and Fiserv is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rollins and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and Rollins 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 Rollins are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Rollins i.e., Rollins and Fiserv go up and down completely randomly.

Pair Corralation between Rollins and Fiserv

Assuming the 90 days horizon Rollins is expected to generate 0.79 times more return on investment than Fiserv. However, Rollins is 1.27 times less risky than Fiserv. It trades about 0.12 of its potential returns per unit of risk. Fiserv Inc is currently generating about 0.03 per unit of risk. If you would invest  4,497  in Rollins on December 29, 2024 and sell it today you would earn a total of  434.00  from holding Rollins or generate 9.65% return on investment over 90 days.

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

Rollins  vs.  Fiserv Inc

Rollins

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rollins may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fiserv Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fiserv is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rollins and Fiserv

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

The idea behind Rollins and Fiserv Inc 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.