Correlation Between SPAR and Cintas
Can any of the company-specific risk be diversified away by investing in both SPAR 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 SPAR and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPAR Group and Cintas, you can compare the effects of market volatilities on SPAR 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 SPAR with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAR and Cintas.
Diversification Opportunities for SPAR and Cintas
Weak diversification
The 3 months correlation between SPAR and Cintas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and SPAR 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 SPAR Group 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 SPAR i.e., SPAR and Cintas go up and down completely randomly.
Pair Corralation between SPAR and Cintas
Given the investment horizon of 90 days SPAR Group is expected to generate 5.86 times more return on investment than Cintas. However, SPAR is 5.86 times more volatile than Cintas. It trades about 0.09 of its potential returns per unit of risk. Cintas is currently generating about 0.16 per unit of risk. 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 |
SPAR Group vs. Cintas
Performance |
| Timeline |
| SPAR Group |
| Cintas |
SPAR and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPAR and Cintas
The main advantage of trading using opposite SPAR and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPAR 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.| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
| Cintas vs. Park Electrochemical | Cintas vs. Innovative Solutions and | Cintas vs. Curtiss Wright | Cintas vs. National Presto Industries |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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