Correlation Between Rentokil Initial and BrightView Holdings

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

Diversification Opportunities for Rentokil Initial and BrightView Holdings

0.43

Correlation Coefficient

Rentokil Initial  BrightView Holdings

Very weak diversification

The 3 months correlation between Rentokil and BrightView is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and BrightView Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightView Holdings 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 BrightView Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightView Holdings has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and BrightView Holdings go up and down completely randomly.

Pair Corralation between Rentokil Initial and BrightView Holdings

Considering the 90-day investment horizon Rentokil Initial PLC is expected to generate 0.98 times more return on investment than BrightView Holdings. However, Rentokil Initial PLC is 1.02 times less risky than BrightView Holdings. It trades about -0.05 of its potential returns per unit of risk. BrightView Holdings is currently generating about -0.15 per unit of risk. 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

Rentokil Initial PLC  vs.  BrightView Holdings

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.

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.

Pair Trading with Rentokil Initial and BrightView Holdings

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

The idea behind Rentokil Initial PLC and BrightView Holdings 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 Stocks Directory module to find actively traded stocks across global markets.