Correlation Between Waste Management and Cintas
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Cintas, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Cintas.
Diversification Opportunities for Waste Management and Cintas
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waste and Cintas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Cintas go up and down completely randomly.
Pair Corralation between Waste Management and Cintas
Allowing for the 90-day total investment horizon Waste Management is expected to generate 3.25 times less return on investment than Cintas. But when comparing it to its historical volatility, Waste Management is 1.66 times less risky than Cintas. It trades about 0.06 of its potential returns per unit of risk. Cintas is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 19,284 in Cintas on January 13, 2025 and sell it today you would earn a total of 1,320 from holding Cintas or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Cintas
Performance |
| Timeline |
| Waste Management |
| Cintas |
Waste Management and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Cintas
The main advantage of trading using opposite Waste Management and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Agilyx AS | Waste Management vs. BQE Water | Waste Management vs. EcoPlus | Waste Management vs. Anaergia |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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