Correlation Between Cintas and Nuvalent

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

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

Diversification Opportunities for Cintas and Nuvalent

0.62

Correlation Coefficient

Cintas  Nuvalent

Poor diversification

The 3 months correlation between Cintas and Nuvalent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Cintas i.e., Cintas and Nuvalent go up and down completely randomly.

Pair Corralation between Cintas and Nuvalent

Given the investment horizon of 90 days Cintas is expected to generate 1.09 times more return on investment than Nuvalent. However, Cintas is 1.09 times more volatile than Nuvalent. It trades about -0.16 of its potential returns per unit of risk. Nuvalent is currently generating about -0.35 per unit of risk. If you would invest  21,097  in Cintas on October 12, 2024 and sell it today you would lose (1,832) from holding Cintas or give up 8.68% of portfolio value over 90 days.

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

Cintas  vs.  Nuvalent

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.

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cintas and Nuvalent

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

The idea behind Cintas and Nuvalent 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.