Correlation Between Cintas and Copart
Can any of the company-specific risk be diversified away by investing in both Cintas and Copart 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 Copart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Copart Inc, you can compare the effects of market volatilities on Cintas and Copart 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 Copart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Copart.
Diversification Opportunities for Cintas and Copart
Poor diversification
The 3 months correlation between Cintas and Copart is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Copart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copart Inc 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 Copart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copart Inc has no effect on the direction of Cintas i.e., Cintas and Copart go up and down completely randomly.
Pair Corralation between Cintas and Copart
Given the investment horizon of 90 days Cintas is expected to generate 0.67 times more return on investment than Copart. However, Cintas is 1.49 times less risky than Copart. It trades about 0.22 of its potential returns per unit of risk. Copart Inc is currently generating about 0.1 per unit of risk. If you would invest 16,667 in Cintas on August 28, 2024 and sell it today you would earn a total of 5,723 from holding Cintas or generate 34.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Copart Inc
Performance |
| Timeline |
| Cintas |
| Copart Inc |
Cintas and Copart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Copart
The main advantage of trading using opposite Cintas and Copart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Copart 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 Copart will offset losses from the drop in Copart's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Copart vs. Park Electrochemical | Copart vs. Innovative Solutions and | Copart vs. Curtiss Wright | Copart vs. National Presto Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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