Correlation Between Frontdoor and Rollins

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

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

Diversification Opportunities for Frontdoor and Rollins

-0.04

Correlation Coefficient

Frontdoor  Rollins

Good diversification

The 3 months correlation between Frontdoor and Rollins is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Frontdoor and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and Frontdoor 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 Frontdoor are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Frontdoor i.e., Frontdoor and Rollins go up and down completely randomly.

Pair Corralation between Frontdoor and Rollins

Given the investment horizon of 90 days Frontdoor is expected to generate 1.2 times more return on investment than Rollins. However, Frontdoor is 1.2 times more volatile than Rollins. It trades about 0.13 of its potential returns per unit of risk. Rollins is currently generating about 0.03 per unit of risk. If you would invest  5,231  in Frontdoor on May 4, 2025 and sell it today you would earn a total of  579.00  from holding Frontdoor or generate 11.07% return on investment over 90 days.

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

Frontdoor  vs.  Rollins

Frontdoor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontdoor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Frontdoor may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Rollins

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Rollins is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Frontdoor and Rollins

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

The idea behind Frontdoor and Rollins 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.