Correlation Between Berkshire Hathaway and Cintas
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Cintas, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Cintas.
Diversification Opportunities for Berkshire Hathaway and Cintas
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Cintas is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway i.e., Berkshire Hathaway and Cintas go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Cintas
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 1.77 times less return on investment than Cintas. But when comparing it to its historical volatility, Berkshire Hathaway is 1.33 times less risky than Cintas. It trades about 0.12 of its potential returns per unit of risk. Cintas is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,852 in Cintas on September 1, 2024 and sell it today you would earn a total of 10,727 from holding Cintas or generate 90.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Cintas
Performance |
| Timeline |
| Berkshire Hathaway |
| Cintas |
Berkshire Hathaway and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Cintas
The main advantage of trading using opposite Berkshire Hathaway and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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