Correlation Between Rentokil Initial and Fidelity National

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

Diversification Opportunities for Rentokil Initial and Fidelity National

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Rentokil and Fidelity is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial Plc and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and Fidelity National go up and down completely randomly.

Pair Corralation between Rentokil Initial and Fidelity National

Assuming the 90 days horizon Rentokil Initial Plc is expected to generate 1.11 times more return on investment than Fidelity National. However, Rentokil Initial is 1.11 times more volatile than Fidelity National Information. It trades about 0.0 of its potential returns per unit of risk. Fidelity National Information is currently generating about -0.01 per unit of risk. If you would invest  677.00  in Rentokil Initial Plc on December 30, 2023 and sell it today you would lose (132.00) from holding Rentokil Initial Plc or give up 19.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy89.27%
ValuesDaily Returns

Rentokil Initial Plc  vs.  Fidelity National Information

 Performance 
       Timeline  
Rentokil Initial Plc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Rentokil Initial Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Rentokil Initial may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Fidelity National 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, Fidelity National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rentokil Initial and Fidelity National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rentokil Initial and Fidelity National

The main advantage of trading using opposite Rentokil Initial and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.
The idea behind Rentokil Initial Plc and Fidelity National Information 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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