Correlation Between Nuvalent and Cintas

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

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

Diversification Opportunities for Nuvalent and Cintas

0.62

Correlation Coefficient

Nuvalent  Cintas

Poor diversification

The 3 months correlation between Nuvalent and Cintas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Nuvalent 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 Nuvalent 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 Nuvalent i.e., Nuvalent and Cintas go up and down completely randomly.

Pair Corralation between Nuvalent and Cintas

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Cintas. But the stock apears to be less risky and, when comparing its historical volatility, Nuvalent is 1.09 times less risky than Cintas. The stock trades about -0.35 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nuvalent  vs.  Cintas

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.

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 Nuvalent and Cintas

The main advantage of trading using opposite Nuvalent and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvalent 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 Nuvalent 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.