Correlation Between Cintas and Broadridge Financial
Can any of the company-specific risk be diversified away by investing in both Cintas and Broadridge Financial 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 Cintas and Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Broadridge Financial Solutions, you can compare the effects of market volatilities on Cintas and Broadridge Financial 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 Cintas with a short position of Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Broadridge Financial.
Diversification Opportunities for Cintas and Broadridge Financial
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cintas and Broadridge is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Cintas 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 Cintas are associated (or correlated) with Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Cintas i.e., Cintas and Broadridge Financial go up and down completely randomly.
Pair Corralation between Cintas and Broadridge Financial
Given the investment horizon of 90 days Cintas is expected to generate 0.96 times more return on investment than Broadridge Financial. However, Cintas is 1.04 times less risky than Broadridge Financial. It trades about 0.08 of its potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.05 per unit of risk. If you would invest 38,925 in Cintas on January 19, 2024 and sell it today you would earn a total of 27,319 from holding Cintas or generate 70.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Broadridge Financial Solutions
Performance |
| Timeline |
| Cintas |
| Broadridge Financial |
Cintas and Broadridge Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Broadridge Financial
The main advantage of trading using opposite Cintas and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Broadridge Financial 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 Broadridge Financial will offset losses from the drop in Broadridge Financial's long position.| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
| Broadridge Financial vs. ExlService Holdings | Broadridge Financial vs. WNS Holdings | Broadridge Financial vs. Gartner | Broadridge Financial vs. The Hackett Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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