Correlation Between Cintas and Malaga Financial

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

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

Diversification Opportunities for Cintas and Malaga Financial

-0.52

Correlation Coefficient

Cintas  Malaga Financial

Excellent diversification

The 3 months correlation between Cintas and Malaga is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Cintas i.e., Cintas and Malaga Financial go up and down completely randomly.

Pair Corralation between Cintas and Malaga Financial

Given the investment horizon of 90 days Cintas is expected to generate 1.56 times less return on investment than Malaga Financial. But when comparing it to its historical volatility, Cintas is 4.46 times less risky than Malaga Financial. It trades about 0.1 of its potential returns per unit of risk. Malaga Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,910  in Malaga Financial on October 11, 2024 and sell it today you would earn a total of  290.00  from holding Malaga Financial or generate 15.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.06%
Values	Daily Returns

Cintas  vs.  Malaga Financial

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Malaga Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malaga Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cintas and Malaga Financial

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

The idea behind Cintas and Malaga Financial 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.