Correlation Between Thomson Reuters and Cintas
Can any of the company-specific risk be diversified away by investing in both Thomson Reuters 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 Thomson Reuters and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thomson Reuters Corp and Cintas, you can compare the effects of market volatilities on Thomson Reuters 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 Thomson Reuters with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Cintas.
Diversification Opportunities for Thomson Reuters and Cintas
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thomson and Cintas is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters Corp and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Thomson Reuters 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 Thomson Reuters Corp 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 Thomson Reuters i.e., Thomson Reuters and Cintas go up and down completely randomly.
Pair Corralation between Thomson Reuters and Cintas
Considering the 90-day investment horizon Thomson Reuters Corp is expected to under-perform the Cintas. But the stock apears to be less risky and, when comparing its historical volatility, Thomson Reuters Corp is 1.02 times less risky than Cintas. The stock trades about -0.11 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thomson Reuters Corp vs. Cintas
Performance |
| Timeline |
| Thomson Reuters Corp |
| Cintas |
Thomson Reuters and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thomson Reuters and Cintas
The main advantage of trading using opposite Thomson Reuters and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomson Reuters 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.| Thomson Reuters vs. Franklin Covey | Thomson Reuters vs. TransUnion | Thomson Reuters vs. ICF International | Thomson Reuters vs. Huron Consulting Group |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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