Correlation Between Aramark Holdings and Cintas
Can any of the company-specific risk be diversified away by investing in both Aramark Holdings and Cintas 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 Aramark Holdings and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aramark Holdings and Cintas, you can compare the effects of market volatilities on Aramark Holdings and Cintas 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 Aramark Holdings with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramark Holdings and Cintas.
Diversification Opportunities for Aramark Holdings and Cintas
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aramark and Cintas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Aramark Holdings 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 Aramark Holdings are associated (or correlated) with Cintas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cintas has no effect on the direction of Aramark Holdings i.e., Aramark Holdings and Cintas go up and down completely randomly.
Pair Corralation between Aramark Holdings and Cintas
Given the investment horizon of 90 days Aramark Holdings is expected to generate 1.18 times less return on investment than Cintas. In addition to that, Aramark Holdings is 1.42 times more volatile than Cintas. It trades about 0.16 of its total potential returns per unit of risk. Cintas is currently generating about 0.26 per unit of volatility. If you would invest 20,748 in Cintas on August 31, 2024 and sell it today you would earn a total of 1,657 from holding Cintas or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aramark Holdings vs. Cintas
Performance |
| Timeline |
| Aramark Holdings |
| Cintas |
Aramark Holdings and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aramark Holdings and Cintas
The main advantage of trading using opposite Aramark Holdings and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramark Holdings position performs unexpectedly, Cintas 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 Cintas will offset losses from the drop in Cintas' long position.| Aramark Holdings vs. Civeo Corp | Aramark Holdings vs. ABM Industries Incorporated | Aramark Holdings vs. ADM Endeavors | Aramark Holdings vs. Maximus |
| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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