Correlation Between Xenia Hotels and Cintas

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

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

Diversification Opportunities for Xenia Hotels and Cintas

0.43

Correlation Coefficient

Xenia Hotels  Cintas

Very weak diversification

The 3 months correlation between Xenia and Cintas is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Xenia Hotels 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 Xenia Hotels Resorts 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 Xenia Hotels i.e., Xenia Hotels and Cintas go up and down completely randomly.

Pair Corralation between Xenia Hotels and Cintas

Assuming the 90 days trading horizon Xenia Hotels is expected to generate 1.76 times less return on investment than Cintas. In addition to that, Xenia Hotels is 1.27 times more volatile than Cintas. It trades about 0.03 of its total potential returns per unit of risk. Cintas is currently generating about 0.06 per unit of volatility. If you would invest  15,402  in Cintas on October 8, 2024 and sell it today you would earn a total of  2,478  from holding Cintas or generate 16.09% return on investment over 90 days.

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

Xenia Hotels Resorts  vs.  Cintas

Xenia Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cintas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cintas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cintas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xenia Hotels and Cintas

The main advantage of trading using opposite Xenia Hotels and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels 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 Xenia Hotels Resorts 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.