Correlation Between G III and Cintas

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

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

Diversification Opportunities for G III and Cintas

-0.38

Correlation Coefficient

G III  Cintas

Very good diversification

The 3 months correlation between GIII and Cintas is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and G III 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 G III Apparel Group 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 G III i.e., G III and Cintas go up and down completely randomly.

Pair Corralation between G III and Cintas

Given the investment horizon of 90 days G III Apparel Group is expected to under-perform the Cintas. But the stock apears to be less risky and, when comparing its historical volatility, G III Apparel Group is 1.45 times less risky than Cintas. The stock trades about -0.23 of its potential returns per unit of risk. The Cintas is currently generating about -0.16 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

G III Apparel Group  vs.  Cintas

G III Apparel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, G III may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with G III and Cintas

The main advantage of trading using opposite G III and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.