Correlation Between Cintas and Aramark Holdings

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

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

Diversification Opportunities for Cintas and Aramark Holdings

0.05

Correlation Coefficient

Cintas  Aramark Holdings

Significant diversification

The 3 months correlation between Cintas and Aramark is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings 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 Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Cintas i.e., Cintas and Aramark Holdings go up and down completely randomly.

Pair Corralation between Cintas and Aramark Holdings

Given the investment horizon of 90 days Cintas is expected to generate 0.95 times more return on investment than Aramark Holdings. However, Cintas is 1.05 times less risky than Aramark Holdings. It trades about 0.12 of its potential returns per unit of risk. Aramark Holdings is currently generating about -0.08 per unit of risk. If you would invest  18,333  in Cintas on December 29, 2024 and sell it today you would earn a total of  1,989  from holding Cintas or generate 10.85% return on investment over 90 days.

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

Cintas  vs.  Aramark Holdings

Cintas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 9 (%) 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 April 2025.

Aramark Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cintas and Aramark Holdings

The main advantage of trading using opposite Cintas and Aramark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Aramark Holdings 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 Aramark Holdings will offset losses from the drop in Aramark Holdings' long position.

The idea behind Cintas and Aramark Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.