Correlation Between Cintas and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Cintas and Berkshire Hathaway 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 Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Berkshire Hathaway, you can compare the effects of market volatilities on Cintas and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Berkshire Hathaway.
Diversification Opportunities for Cintas and Berkshire Hathaway
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cintas and Berkshire is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Cintas i.e., Cintas and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Cintas and Berkshire Hathaway
Given the investment horizon of 90 days Cintas is expected to generate 0.97 times more return on investment than Berkshire Hathaway. However, Cintas is 1.03 times less risky than Berkshire Hathaway. It trades about 0.34 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.24 per unit of risk. If you would invest 20,544 in Cintas on September 1, 2024 and sell it today you would earn a total of 2,035 from holding Cintas or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Berkshire Hathaway
Performance |
| Timeline |
| Cintas |
| Berkshire Hathaway |
Cintas and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Berkshire Hathaway
The main advantage of trading using opposite Cintas and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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