Correlation Between Gibraltar Industries and Cintas

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

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

Diversification Opportunities for Gibraltar Industries and Cintas

-0.5

Correlation Coefficient

Gibraltar Industries  Cintas

Very good diversification

The 3 months correlation between Gibraltar and Cintas is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Gibraltar Industries 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 Gibraltar Industries 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 Gibraltar Industries i.e., Gibraltar Industries and Cintas go up and down completely randomly.

Pair Corralation between Gibraltar Industries and Cintas

Given the investment horizon of 90 days Gibraltar Industries is expected to under-perform the Cintas. In addition to that, Gibraltar Industries is 2.07 times more volatile than Cintas. It trades about -0.27 of its total potential returns per unit of risk. Cintas is currently generating about -0.14 per unit of volatility. If you would invest  68,054  in Cintas on January 31, 2024 and sell it today you would lose (1,471) from holding Cintas or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Gibraltar Industries  vs.  Cintas

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cintas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cintas may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Gibraltar Industries and Cintas

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

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.