Correlation Between Wolters Kluwer and Cintas
Can any of the company-specific risk be diversified away by investing in both Wolters Kluwer 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 Wolters Kluwer and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolters Kluwer NV and Cintas, you can compare the effects of market volatilities on Wolters Kluwer 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 Wolters Kluwer with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolters Kluwer and Cintas.
Diversification Opportunities for Wolters Kluwer and Cintas
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wolters and Cintas is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Wolters Kluwer 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 Wolters Kluwer NV 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 Wolters Kluwer i.e., Wolters Kluwer and Cintas go up and down completely randomly.
Pair Corralation between Wolters Kluwer and Cintas
Assuming the 90 days horizon Wolters Kluwer NV is expected to generate 2.98 times more return on investment than Cintas. However, Wolters Kluwer is 2.98 times more volatile than Cintas. It trades about 0.16 of its potential returns per unit of risk. Cintas is currently generating about 0.28 per unit of risk. If you would invest 16,214 in Wolters Kluwer NV on October 23, 2024 and sell it today you would earn a total of 1,504 from holding Wolters Kluwer NV or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wolters Kluwer NV vs. Cintas
Performance |
| Timeline |
| Wolters Kluwer NV |
| Cintas |
Wolters Kluwer and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolters Kluwer and Cintas
The main advantage of trading using opposite Wolters Kluwer and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolters Kluwer 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.The idea behind Wolters Kluwer NV and Cintas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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