Correlation Between Cintas and K Bro
Can any of the company-specific risk be diversified away by investing in both Cintas and K Bro 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 K Bro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and K Bro Linen, you can compare the effects of market volatilities on Cintas and K Bro 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 K Bro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and K Bro.
Diversification Opportunities for Cintas and K Bro
Poor diversification
The 3 months correlation between Cintas and KBRLF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen 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 K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Cintas i.e., Cintas and K Bro go up and down completely randomly.
Pair Corralation between Cintas and K Bro
Given the investment horizon of 90 days Cintas is expected to generate 3.23 times more return on investment than K Bro. However, Cintas is 3.23 times more volatile than K Bro Linen. It trades about 0.16 of its potential returns per unit of risk. K Bro Linen is currently generating about 0.14 per unit of risk. If you would invest 15,624 in Cintas on August 27, 2024 and sell it today you would earn a total of 6,552 from holding Cintas or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.94% |
| Values | Daily Returns |
Cintas vs. K Bro Linen
Performance |
| Timeline |
| Cintas |
| K Bro Linen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cintas and K Bro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and K Bro
The main advantage of trading using opposite Cintas and K Bro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, K Bro 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 K Bro will offset losses from the drop in K Bro's long position.| Cintas vs. Park Electrochemical | Cintas vs. Innovative Solutions and | Cintas vs. Curtiss Wright | Cintas 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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