Correlation Between Cintas and Verbund AG

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

Diversification Opportunities for Cintas and Verbund AG

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cintas and Verbund is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Verbund AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verbund AG ADR 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 Verbund AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verbund AG ADR has no effect on the direction of Cintas i.e., Cintas and Verbund AG go up and down completely randomly.

Pair Corralation between Cintas and Verbund AG

Given the investment horizon of 90 days Cintas is expected to generate 0.36 times more return on investment than Verbund AG. However, Cintas is 2.81 times less risky than Verbund AG. It trades about 0.26 of its potential returns per unit of risk. Verbund AG ADR is currently generating about -0.01 per unit of risk. If you would invest  20,822  in Cintas on August 28, 2024 and sell it today you would earn a total of  1,568  from holding Cintas or generate 7.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cintas  vs.  Verbund AG ADR

 Performance 
       Timeline  
Cintas 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cintas may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Verbund AG ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Verbund AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cintas and Verbund AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cintas and Verbund AG

The main advantage of trading using opposite Cintas and Verbund AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Verbund AG 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 Verbund AG will offset losses from the drop in Verbund AG's long position.
The idea behind Cintas and Verbund AG ADR 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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