Correlation Between Cintas and Verisk Analytics

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

Diversification Opportunities for Cintas and Verisk Analytics

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Cintas and Verisk is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Cintas i.e., Cintas and Verisk Analytics go up and down completely randomly.

Pair Corralation between Cintas and Verisk Analytics

Given the investment horizon of 90 days Cintas is expected to generate 0.99 times more return on investment than Verisk Analytics. However, Cintas is 1.01 times less risky than Verisk Analytics. It trades about 0.08 of its potential returns per unit of risk. Verisk Analytics is currently generating about 0.02 per unit of risk. If you would invest  40,958  in Cintas on December 30, 2023 and sell it today you would earn a total of  27,745  from holding Cintas or generate 67.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cintas  vs.  Verisk Analytics

 Performance 
       Timeline  
Cintas 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Cintas unveiled solid returns over the last few months and may actually be approaching a breakup point.
Verisk Analytics 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cintas and Verisk Analytics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cintas and Verisk Analytics

The main advantage of trading using opposite Cintas and Verisk Analytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Verisk Analytics 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 Verisk Analytics will offset losses from the drop in Verisk Analytics' long position.
The idea behind Cintas and Verisk Analytics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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