Correlation Between Cintas and Euronet Worldwide

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Can any of the company-specific risk be diversified away by investing in both Cintas and Euronet Worldwide 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 Euronet Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Euronet Worldwide, you can compare the effects of market volatilities on Cintas and Euronet Worldwide 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 Euronet Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Euronet Worldwide.

Diversification Opportunities for Cintas and Euronet Worldwide

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cintas and Euronet is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Euronet Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronet Worldwide 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 Euronet Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronet Worldwide has no effect on the direction of Cintas i.e., Cintas and Euronet Worldwide go up and down completely randomly.

Pair Corralation between Cintas and Euronet Worldwide

Given the investment horizon of 90 days Cintas is expected to generate 1.38 times more return on investment than Euronet Worldwide. However, Cintas is 1.38 times more volatile than Euronet Worldwide. It trades about 0.23 of its potential returns per unit of risk. Euronet Worldwide is currently generating about 0.09 per unit of risk. If you would invest  62,815  in Cintas on December 29, 2023 and sell it today you would earn a total of  5,888  from holding Cintas or generate 9.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

Cintas  vs.  Euronet Worldwide

 Performance 
       Timeline  
Cintas 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cintas unveiled solid returns over the last few months and may actually be approaching a breakup point.
Euronet Worldwide 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Euronet Worldwide may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Cintas and Euronet Worldwide Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cintas and Euronet Worldwide

The main advantage of trading using opposite Cintas and Euronet Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Euronet Worldwide 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 Euronet Worldwide will offset losses from the drop in Euronet Worldwide's long position.
The idea behind Cintas and Euronet Worldwide 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.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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