Correlation Between Brambles and Cintas
Can any of the company-specific risk be diversified away by investing in both Brambles 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 Brambles and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brambles Ltd ADR and Cintas, you can compare the effects of market volatilities on Brambles 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 Brambles with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brambles and Cintas.
Diversification Opportunities for Brambles and Cintas
Average diversification
The 3 months correlation between Brambles and Cintas is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Brambles Ltd ADR and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Brambles 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 Brambles Ltd ADR 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 Brambles i.e., Brambles and Cintas go up and down completely randomly.
Pair Corralation between Brambles and Cintas
Assuming the 90 days horizon Brambles is expected to generate 2.51 times less return on investment than Cintas. In addition to that, Brambles is 1.06 times more volatile than Cintas. It trades about 0.09 of its total potential returns per unit of risk. Cintas is currently generating about 0.23 per unit of volatility. If you would invest 20,876 in Cintas on August 30, 2024 and sell it today you would earn a total of 1,529 from holding Cintas or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brambles Ltd ADR vs. Cintas
Performance |
| Timeline |
| Brambles ADR |
| Cintas |
Brambles and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brambles and Cintas
The main advantage of trading using opposite Brambles and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brambles 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.| Brambles vs. ABIVAX Socit Anonyme | Brambles vs. Pinnacle Sherman Multi Strategy | Brambles vs. Morningstar Unconstrained Allocation | Brambles vs. SPACE |
| 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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