Correlation Between Rentokil Initial and PFSweb

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

Diversification Opportunities for Rentokil Initial and PFSweb

-0.41

Correlation Coefficient

Rentokil Initial  PFSweb

Very good diversification

The 3 months correlation between Rentokil and PFSweb is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial PLC and PFSweb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFSweb 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 PFSweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFSweb Inc has no effect on the direction of Rentokil Initial i.e., Rentokil Initial and PFSweb go up and down completely randomly.

Pair Corralation between Rentokil Initial and PFSweb

If you would invest  452.00  in PFSweb Inc on August 15, 2024 and sell it today you would earn a total of  0.00  from holding PFSweb Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Rentokil Initial PLC  vs.  PFSweb 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 uncertain 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.

PFSweb Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFSweb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PFSweb is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Rentokil Initial and PFSweb

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

The idea behind Rentokil Initial PLC and PFSweb 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.