Correlation Between Fortum Oyj and Rentokil Initial
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj 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 Fortum Oyj and Rentokil Initial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Rentokil Initial PLC, you can compare the effects of market volatilities on Fortum Oyj 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 Fortum Oyj with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Rentokil Initial.
Diversification Opportunities for Fortum Oyj and Rentokil Initial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortum and Rentokil is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj 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 Fortum Oyj 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 Fortum Oyj 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 Fortum Oyj i.e., Fortum Oyj and Rentokil Initial go up and down completely randomly.
Pair Corralation between Fortum Oyj and Rentokil Initial
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 1.0 times more return on investment than Rentokil Initial. However, Fortum Oyj is 1.0 times more volatile than Rentokil Initial PLC. It trades about 0.14 of its potential returns per unit of risk. Rentokil Initial PLC is currently generating about 0.09 per unit of risk. If you would invest 1,479 in Fortum Oyj on September 7, 2025 and sell it today you would earn a total of 259.00 from holding Fortum Oyj or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Fortum Oyj vs. Rentokil Initial PLC
Performance |
| Timeline |
| Fortum Oyj |
| Rentokil Initial PLC |
Fortum Oyj and Rentokil Initial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Rentokil Initial
The main advantage of trading using opposite Fortum Oyj and Rentokil Initial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj 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.| Fortum Oyj vs. Pulsar Helium | Fortum Oyj vs. Tungsten West PLC | Fortum Oyj vs. Hardide PLC | Fortum Oyj vs. Versarien PLC |
| Rentokil Initial vs. Juma Technology Corp | Rentokil Initial vs. Freedom Internet Group | Rentokil Initial vs. B Communications | Rentokil Initial vs. Centaurus Metals Limited |
Check out your portfolio center.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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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