Correlation Between Sonida Senior and Cintas
Can any of the company-specific risk be diversified away by investing in both Sonida Senior 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 Sonida Senior and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonida Senior Living and Cintas, you can compare the effects of market volatilities on Sonida Senior 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 Sonida Senior with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Cintas.
Diversification Opportunities for Sonida Senior and Cintas
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonida and Cintas is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and Cintas go up and down completely randomly.
Pair Corralation between Sonida Senior and Cintas
Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Cintas. But the stock apears to be less risky and, when comparing its historical volatility, Sonida Senior Living is 1.24 times less risky than Cintas. The stock trades about -0.31 of its potential returns per unit of risk. The Cintas is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 21,097 in Cintas on October 12, 2024 and sell it today you would lose (1,832) from holding Cintas or give up 8.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Cintas
Performance |
| Timeline |
| Sonida Senior Living |
| Cintas |
Sonida Senior and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Cintas
The main advantage of trading using opposite Sonida Senior and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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.| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding Corp |
| 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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