Correlation Between Cintas and Discount Print

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Can any of the company-specific risk be diversified away by investing in both Cintas and Discount Print 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 Discount Print into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Discount Print USA, you can compare the effects of market volatilities on Cintas and Discount Print 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 Discount Print. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Discount Print.

Diversification Opportunities for Cintas and Discount Print

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cintas and Discount is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Discount Print USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Print USA 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 Discount Print. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Print USA has no effect on the direction of Cintas i.e., Cintas and Discount Print go up and down completely randomly.

Pair Corralation between Cintas and Discount Print

Given the investment horizon of 90 days Cintas is expected to generate 16.62 times less return on investment than Discount Print. But when comparing it to its historical volatility, Cintas is 34.05 times less risky than Discount Print. It trades about 0.33 of its potential returns per unit of risk. Discount Print USA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Discount Print USA on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Discount Print USA or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.74%
ValuesDaily Returns

Cintas  vs.  Discount Print USA

 Performance 
       Timeline  
Cintas 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cintas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cintas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Discount Print USA 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Discount Print USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly sluggish basic indicators, Discount Print demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cintas and Discount Print Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cintas and Discount Print

The main advantage of trading using opposite Cintas and Discount Print positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Discount Print 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 Discount Print will offset losses from the drop in Discount Print's long position.
The idea behind Cintas and Discount Print USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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