Correlation Between Cintas and Federal Hme
Can any of the company-specific risk be diversified away by investing in both Cintas and Federal Hme 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 Federal Hme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Federal Hme 655, you can compare the effects of market volatilities on Cintas and Federal Hme 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 Federal Hme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Federal Hme.
Diversification Opportunities for Cintas and Federal Hme
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cintas and Federal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Federal Hme 655 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Hme 655 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 Federal Hme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Hme 655 has no effect on the direction of Cintas i.e., Cintas and Federal Hme go up and down completely randomly.
Pair Corralation between Cintas and Federal Hme
Given the investment horizon of 90 days Cintas is expected to generate 9.94 times less return on investment than Federal Hme. But when comparing it to its historical volatility, Cintas is 11.38 times less risky than Federal Hme. It trades about 0.34 of its potential returns per unit of risk. Federal Hme 655 is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 376.00 in Federal Hme 655 on September 1, 2024 and sell it today you would earn a total of 470.00 from holding Federal Hme 655 or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cintas vs. Federal Hme 655
Performance |
| Timeline |
| Cintas |
| Federal Hme 655 |
Cintas and Federal Hme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Federal Hme
The main advantage of trading using opposite Cintas and Federal Hme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Federal Hme 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 Federal Hme will offset losses from the drop in Federal Hme's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal National Mortgage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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