Correlation Between Cintas and SPAR
Can any of the company-specific risk be diversified away by investing in both Cintas and SPAR 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 SPAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and SPAR Group, you can compare the effects of market volatilities on Cintas and SPAR 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 SPAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and SPAR.
Diversification Opportunities for Cintas and SPAR
Weak diversification
The 3 months correlation between Cintas and SPAR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Cintas i.e., Cintas and SPAR go up and down completely randomly.
Pair Corralation between Cintas and SPAR
Given the investment horizon of 90 days Cintas is expected to generate 3.12 times less return on investment than SPAR. But when comparing it to its historical volatility, Cintas is 5.86 times less risky than SPAR. It trades about 0.16 of its potential returns per unit of risk. SPAR Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 104.00 in SPAR Group on August 27, 2024 and sell it today you would earn a total of 117.00 from holding SPAR Group or generate 112.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. SPAR Group
Performance |
| Timeline |
| Cintas |
| SPAR Group |
Cintas and SPAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and SPAR
The main advantage of trading using opposite Cintas and SPAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, SPAR 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 SPAR will offset losses from the drop in SPAR's long position.| Cintas vs. Park Electrochemical | Cintas vs. Innovative Solutions and | Cintas vs. Curtiss Wright | Cintas vs. National Presto Industries |
| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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