Correlation Between Cintas and Canna Consumer

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

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

Diversification Opportunities for Cintas and Canna Consumer

0.1

Correlation Coefficient

Cintas  Canna Consumer

Average diversification

The 3 months correlation between Cintas and Canna is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Canna Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canna Consumer Goods 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 Canna Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canna Consumer Goods has no effect on the direction of Cintas i.e., Cintas and Canna Consumer go up and down completely randomly.

Pair Corralation between Cintas and Canna Consumer

Given the investment horizon of 90 days Cintas is expected to under-perform the Canna Consumer. But the stock apears to be less risky and, when comparing its historical volatility, Cintas is 7.23 times less risky than Canna Consumer. The stock trades about -0.06 of its potential returns per unit of risk. The Canna Consumer Goods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Canna Consumer Goods on September 17, 2024 and sell it today you would earn a total of  3.00  from holding Canna Consumer Goods or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cintas  vs.  Canna Consumer Goods

Cintas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cintas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Canna Consumer Goods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canna Consumer Goods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Canna Consumer revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cintas and Canna Consumer

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

The idea behind Cintas and Canna Consumer Goods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.