Correlation Between Innovative Solutions and Cintas
Can any of the company-specific risk be diversified away by investing in both Innovative Solutions 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 Innovative Solutions and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Solutions and and Cintas, you can compare the effects of market volatilities on Innovative Solutions 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 Innovative Solutions with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Solutions and Cintas.
Diversification Opportunities for Innovative Solutions and Cintas
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and Cintas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Innovative Solutions 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 Innovative Solutions and 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 Innovative Solutions i.e., Innovative Solutions and Cintas go up and down completely randomly.
Pair Corralation between Innovative Solutions and Cintas
Given the investment horizon of 90 days Innovative Solutions and is expected to generate 1.15 times more return on investment than Cintas. However, Innovative Solutions is 1.15 times more volatile than Cintas. It trades about 0.2 of its potential returns per unit of risk. Cintas is currently generating about 0.23 per unit of risk. If you would invest 722.00 in Innovative Solutions and on August 27, 2024 and sell it today you would earn a total of 48.00 from holding Innovative Solutions and or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Solutions and vs. Cintas
Performance |
| Timeline |
| Innovative Solutions and |
| Cintas |
Innovative Solutions and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Solutions and Cintas
The main advantage of trading using opposite Innovative Solutions and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions 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.| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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