Correlation Between Intertek Group and Cintas

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

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

Diversification Opportunities for Intertek Group and Cintas

0.15

Correlation Coefficient

Intertek Group  Cintas

Average diversification

The 3 months correlation between Intertek and Cintas is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Intertek Group Plc and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Intertek Group 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 Intertek Group Plc 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 Intertek Group i.e., Intertek Group and Cintas go up and down completely randomly.

Pair Corralation between Intertek Group and Cintas

Assuming the 90 days horizon Intertek Group Plc is expected to generate 0.88 times more return on investment than Cintas. However, Intertek Group Plc is 1.14 times less risky than Cintas. It trades about 0.09 of its potential returns per unit of risk. Cintas is currently generating about -0.05 per unit of risk. If you would invest  5,900  in Intertek Group Plc on December 2, 2024 and sell it today you would earn a total of  555.00  from holding Intertek Group Plc or generate 9.41% return on investment over 90 days.

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

Intertek Group Plc  vs.  Cintas

Intertek Group Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intertek Group Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Intertek Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cintas

Risk-Adjusted Performance

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 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.

Pair Trading with Intertek Group and Cintas

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

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.