Correlation Between Aramark Holdings and Cintas

Can any of the company-specific risk be diversified away by investing in both Aramark Holdings 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 Aramark Holdings and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aramark Holdings and Cintas, you can compare the effects of market volatilities on Aramark Holdings 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 Aramark Holdings with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramark Holdings and Cintas.

Diversification Opportunities for Aramark Holdings and Cintas

0.6

Correlation Coefficient

Aramark Holdings  Cintas

Poor diversification

The 3 months correlation between Aramark and Cintas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings i.e., Aramark Holdings and Cintas go up and down completely randomly.

Pair Corralation between Aramark Holdings and Cintas

Given the investment horizon of 90 days Aramark Holdings is expected to generate 1.69 times more return on investment than Cintas. However, Aramark Holdings is 1.69 times more volatile than Cintas. It trades about 0.04 of its potential returns per unit of risk. Cintas is currently generating about 0.05 per unit of risk. If you would invest  3,106  in Aramark Holdings on March 2, 2024 and sell it today you would earn a total of  33.00  from holding Aramark Holdings or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aramark Holdings  vs.  Cintas

Aramark Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aramark Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cintas

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Aramark Holdings and Cintas

The main advantage of trading using opposite Aramark Holdings and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramark Holdings 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 Aramark Holdings 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..