Correlation Between Sodexo PK and Cintas
Can any of the company-specific risk be diversified away by investing in both Sodexo PK 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 Sodexo PK and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Cintas, you can compare the effects of market volatilities on Sodexo PK 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 Sodexo PK with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Cintas.
Diversification Opportunities for Sodexo PK and Cintas
Good diversification
The 3 months correlation between Sodexo and Cintas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Sodexo PK 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 Sodexo PK 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 Sodexo PK i.e., Sodexo PK and Cintas go up and down completely randomly.
Pair Corralation between Sodexo PK and Cintas
Assuming the 90 days horizon Sodexo PK is expected to under-perform the Cintas. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sodexo PK is 1.17 times less risky than Cintas. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Cintas is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 20,822 in Cintas on August 28, 2024 and sell it today you would earn a total of 1,825 from holding Cintas or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo PK vs. Cintas
Performance |
| Timeline |
| Sodexo PK |
| Cintas |
Sodexo PK and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Cintas
The main advantage of trading using opposite Sodexo PK and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK 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.| Sodexo PK vs. FitLife Brands, Common | Sodexo PK vs. HUMANA INC | Sodexo PK vs. SCOR PK | Sodexo PK vs. Aquagold 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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