Correlation Between GM and CINTAS
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By analyzing existing cross correlation between General Motors and CINTAS P NO, you can compare the effects of market volatilities on GM 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 GM with a short position of CINTAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CINTAS.
Diversification Opportunities for GM and CINTAS
Modest diversification
The 3 months correlation between GM and CINTAS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CINTAS P NO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CINTAS P NO and GM 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 General Motors 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 P NO has no effect on the direction of GM i.e., GM and CINTAS go up and down completely randomly.
Pair Corralation between GM and CINTAS
Allowing for the 90-day total investment horizon GM is expected to generate 76.76 times less return on investment than CINTAS. But when comparing it to its historical volatility, General Motors is 55.19 times less risky than CINTAS. It trades about 0.07 of its potential returns per unit of risk. CINTAS P NO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10,704 in CINTAS P NO on August 31, 2024 and sell it today you would earn a total of 325.00 from holding CINTAS P NO or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 22.46% |
| Values | Daily Returns |
General Motors vs. CINTAS P NO
Performance |
| Timeline |
| General Motors |
| CINTAS P NO |
GM and CINTAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CINTAS
The main advantage of trading using opposite GM and CINTAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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's long position.The idea behind General Motors and CINTAS P NO 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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