Correlation Between RB Global and Intertek Group

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

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

Diversification Opportunities for RB Global and Intertek Group

-0.79

Correlation Coefficient

RB Global  Intertek Group

Pay attention - limited upside

The 3 months correlation between RBA and Intertek is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and Intertek Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertek Group Plc and RB Global 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 RB Global are associated (or correlated) with Intertek Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertek Group Plc has no effect on the direction of RB Global i.e., RB Global and Intertek Group go up and down completely randomly.

Pair Corralation between RB Global and Intertek Group

Considering the 90-day investment horizon RB Global is expected to generate 0.81 times more return on investment than Intertek Group. However, RB Global is 1.24 times less risky than Intertek Group. It trades about 0.14 of its potential returns per unit of risk. Intertek Group Plc is currently generating about -0.03 per unit of risk. If you would invest  8,490  in RB Global on September 12, 2024 and sell it today you would earn a total of  1,125  from holding RB Global or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

RB Global  vs.  Intertek Group Plc

RB Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RB Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, RB Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Intertek Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertek Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Intertek Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RB Global and Intertek Group

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

The idea behind RB Global and Intertek Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.