Correlation Between Cintas and Visa
Can any of the company-specific risk be diversified away by investing in both Cintas and Visa 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 Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Visa Class A, you can compare the effects of market volatilities on Cintas and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Visa.
Diversification Opportunities for Cintas and Visa
Significant diversification
The 3 months correlation between Cintas and Visa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Cintas i.e., Cintas and Visa go up and down completely randomly.
Pair Corralation between Cintas and Visa
Given the investment horizon of 90 days Cintas is expected to generate 2.92 times more return on investment than Visa. However, Cintas is 2.92 times more volatile than Visa Class A. It trades about 0.12 of its potential returns per unit of risk. Visa Class A is currently generating about -0.15 per unit of risk. If you would invest 63,566 in Cintas on January 25, 2024 and sell it today you would earn a total of 3,067 from holding Cintas or generate 4.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cintas vs. Visa Class A
Performance |
Timeline |
Cintas |
Visa Class A |
Cintas and Visa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cintas and Visa
The main advantage of trading using opposite Cintas and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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