Correlation Between Levi Strauss and Cintas

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

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

Diversification Opportunities for Levi Strauss and Cintas

-0.11

Correlation Coefficient

Levi Strauss  Cintas

Good diversification

The 3 months correlation between Levi and Cintas is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Levi Strauss 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 Levi Strauss Co 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 Levi Strauss i.e., Levi Strauss and Cintas go up and down completely randomly.

Pair Corralation between Levi Strauss and Cintas

Given the investment horizon of 90 days Levi Strauss is expected to generate 2.28 times less return on investment than Cintas. In addition to that, Levi Strauss is 1.75 times more volatile than Cintas. It trades about 0.02 of its total potential returns per unit of risk. Cintas is currently generating about 0.1 per unit of volatility. If you would invest  10,716  in Cintas on October 11, 2024 and sell it today you would earn a total of  8,549  from holding Cintas or generate 79.78% return on investment over 90 days.

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

Levi Strauss Co  vs.  Cintas

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Levi Strauss is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 Levi Strauss and Cintas

The main advantage of trading using opposite Levi Strauss and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss 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 Levi Strauss Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..