Correlation Between Cintas and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cintas and Dow Jones 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 Cintas and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Dow Jones Industrial, you can compare the effects of market volatilities on Cintas and Dow Jones 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 Cintas with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Dow Jones.
Diversification Opportunities for Cintas and Dow Jones
Very poor diversification
The 3 months correlation between Cintas and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Cintas 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 Cintas are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cintas i.e., Cintas and Dow Jones go up and down completely randomly.
Pair Corralation between Cintas and Dow Jones
Assuming the 90 days horizon Cintas is expected to generate 1.83 times more return on investment than Dow Jones. However, Cintas is 1.83 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of risk. If you would invest 19,348 in Cintas on August 25, 2024 and sell it today you would earn a total of 1,302 from holding Cintas or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Dow Jones Industrial
Performance |
| Timeline |
Cintas and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cintas
Pair trading matchups for Cintas
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cintas and Dow Jones
The main advantage of trading using opposite Cintas and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Cintas vs. Alaska Air Group | Cintas vs. DELTA AIR LINES | Cintas vs. SHELF DRILLING LTD | Cintas vs. Altair Engineering |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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