Correlation Between Cintas and Pacific Ridge
Can any of the company-specific risk be diversified away by investing in both Cintas and Pacific Ridge 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 Pacific Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Pacific Ridge Exploration, you can compare the effects of market volatilities on Cintas and Pacific Ridge 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 Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Pacific Ridge.
Diversification Opportunities for Cintas and Pacific Ridge
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cintas and Pacific is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge Exploration 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 Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of Cintas i.e., Cintas and Pacific Ridge go up and down completely randomly.
Pair Corralation between Cintas and Pacific Ridge
Given the investment horizon of 90 days Cintas is expected to generate 9.36 times less return on investment than Pacific Ridge. But when comparing it to its historical volatility, Cintas is 21.03 times less risky than Pacific Ridge. It trades about 0.25 of its potential returns per unit of risk. Pacific Ridge Exploration is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Pacific Ridge Exploration on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Pacific Ridge Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cintas vs. Pacific Ridge Exploration
Performance |
| Timeline |
| Cintas |
| Pacific Ridge Exploration |
Cintas and Pacific Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Pacific Ridge
The main advantage of trading using opposite Cintas and Pacific Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Pacific Ridge 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 Pacific Ridge will offset losses from the drop in Pacific Ridge's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Pacific Ridge vs. Morningstar Unconstrained Allocation | Pacific Ridge vs. High Yield Municipal Fund | Pacific Ridge vs. Knife River | Pacific Ridge vs. Klckner Co SE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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