Correlation Between SMX Public and Rentokil Initial

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

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

Diversification Opportunities for SMX Public and Rentokil Initial

-0.76

Correlation Coefficient

SMX Public  Rentokil Initial

Pay attention - limited upside

The 3 months correlation between SMX and Rentokil is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SMX Public Limited 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 SMX Public 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 SMX Public Limited 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 SMX Public i.e., SMX Public and Rentokil Initial go up and down completely randomly.

Pair Corralation between SMX Public and Rentokil Initial

Considering the 90-day investment horizon SMX Public Limited is expected to generate 16.84 times more return on investment than Rentokil Initial. However, SMX Public is 16.84 times more volatile than Rentokil Initial PLC. It trades about 0.02 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.07 per unit of risk. If you would invest  237.00  in SMX Public Limited on October 8, 2024 and sell it today you would lose (189.80) from holding SMX Public Limited or give up 80.08% of portfolio value over 90 days.

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

SMX Public Limited  vs.  Rentokil Initial PLC

SMX Public Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Rentokil Initial PLC

Risk-Adjusted Performance

5 of 100

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. In spite of very uncertain basic indicators, Rentokil Initial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SMX Public and Rentokil Initial

The main advantage of trading using opposite SMX Public and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMX Public 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 SMX Public Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.