Correlation Between PARK24 SPONS and Cintas

Can any of the company-specific risk be diversified away by investing in both PARK24 SPONS 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 PARK24 SPONS and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PARK24 SPONS ADR1 and Cintas, you can compare the effects of market volatilities on PARK24 SPONS 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 PARK24 SPONS with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARK24 SPONS and Cintas.

Diversification Opportunities for PARK24 SPONS and Cintas

-0.22

Correlation Coefficient

PARK24 SPONS  Cintas

Very good diversification

The 3 months correlation between PARK24 and Cintas is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PARK24 SPONS ADR1 and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and PARK24 SPONS 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 PARK24 SPONS ADR1 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 PARK24 SPONS i.e., PARK24 SPONS and Cintas go up and down completely randomly.

Pair Corralation between PARK24 SPONS and Cintas

Assuming the 90 days horizon PARK24 SPONS ADR1 is expected to generate 0.94 times more return on investment than Cintas. However, PARK24 SPONS ADR1 is 1.07 times less risky than Cintas. It trades about 0.33 of its potential returns per unit of risk. Cintas is currently generating about -0.26 per unit of risk. If you would invest  1,070  in PARK24 SPONS ADR1 on September 23, 2024 and sell it today you would earn a total of  220.00  from holding PARK24 SPONS ADR1 or generate 20.56% return on investment over 90 days.

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

PARK24 SPONS ADR1  vs.  Cintas

PARK24 SPONS ADR1

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PARK24 SPONS ADR1 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARK24 SPONS reported solid returns over the last few months and may actually be approaching a breakup point.

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 PARK24 SPONS and Cintas

The main advantage of trading using opposite PARK24 SPONS and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARK24 SPONS 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 PARK24 SPONS ADR1 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.