Correlation Between Cintas and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Cintas and Relx PLC 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 Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Relx PLC ADR, you can compare the effects of market volatilities on Cintas and Relx PLC 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Relx PLC.
Diversification Opportunities for Cintas and Relx PLC
Good diversification
The 3 months correlation between Cintas and Relx is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Cintas i.e., Cintas and Relx PLC go up and down completely randomly.
Pair Corralation between Cintas and Relx PLC
Given the investment horizon of 90 days Cintas is expected to generate 0.98 times more return on investment than Relx PLC. However, Cintas is 1.02 times less risky than Relx PLC. It trades about 0.23 of its potential returns per unit of risk. Relx PLC ADR is currently generating about -0.07 per unit of risk. If you would invest 20,876 in Cintas on August 30, 2024 and sell it today you would earn a total of 1,529 from holding Cintas or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Relx PLC ADR
Performance |
| Timeline |
| Cintas |
| Relx PLC ADR |
Cintas and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Relx PLC
The main advantage of trading using opposite Cintas and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Relx PLC vs. Maximus | Relx PLC vs. CBIZ Inc | Relx PLC vs. First Advantage Corp | Relx PLC vs. Network 1 Technologies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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