Correlation Between Rentokil Initial and Team

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

Diversification Opportunities for Rentokil Initial and Team

-0.5

Correlation Coefficient

Rentokil Initial  Team

Very good diversification

The 3 months correlation between Rentokil and Team is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and Team Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Inc 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 Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Inc has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Team go up and down completely randomly.

Pair Corralation between Rentokil Initial and Team

Considering the 90-day investment horizon Rentokil Initial PLC is expected to under-perform the Team. But the stock apears to be less risky and, when comparing its historical volatility, Rentokil Initial PLC is 2.16 times less risky than Team. The stock trades about -0.03 of its potential returns per unit of risk. The Team Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  725.00  in Team Inc on August 31, 2024 and sell it today you would earn a total of  963.00  from holding Team Inc or generate 132.83% return on investment over 90 days.

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

Rentokil Initial PLC  vs.  Team Inc

Rentokil Initial PLC

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Team Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rentokil Initial and Team

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

The idea behind Rentokil Initial PLC and Team 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.