Correlation Between Dow Jones and Cintas
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cintas 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 Dow Jones and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Cintas, you can compare the effects of market volatilities on Dow Jones and Cintas 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 Dow Jones with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cintas.
Diversification Opportunities for Dow Jones and Cintas
Very weak diversification
The 3 months correlation between Dow and Cintas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Cintas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cintas has no effect on the direction of Dow Jones i.e., Dow Jones and Cintas go up and down completely randomly.
Pair Corralation between Dow Jones and Cintas
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Cintas. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.12 times less risky than Cintas. The index trades about -0.06 of its potential returns per unit of risk. The Cintas is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19,517 in Cintas on January 14, 2025 and sell it today you would earn a total of 1,087 from holding Cintas or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cintas
Performance |
| Timeline |
Dow Jones and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cintas
Pair trading matchups for Cintas
Pair Trading with Dow Jones and Cintas
The main advantage of trading using opposite Dow Jones and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cintas 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 Cintas will offset losses from the drop in Cintas' long position.| Dow Jones vs. Guangdong Investment Limited | Dow Jones vs. Presidio Property Trust | Dow Jones vs. Comstock Holding Companies | Dow Jones vs. Old Republic International |
| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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