Correlation Between Siriuspoint and Cintas

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

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

Diversification Opportunities for Siriuspoint and Cintas

0.14

Correlation Coefficient

Siriuspoint  Cintas

Average diversification

The 3 months correlation between Siriuspoint and Cintas is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Siriuspoint 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 Siriuspoint 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 Siriuspoint i.e., Siriuspoint and Cintas go up and down completely randomly.

Pair Corralation between Siriuspoint and Cintas

Given the investment horizon of 90 days Siriuspoint is expected to generate 1.51 times less return on investment than Cintas. In addition to that, Siriuspoint is 3.61 times more volatile than Cintas. It trades about 0.06 of its total potential returns per unit of risk. Cintas is currently generating about 0.31 per unit of volatility. If you would invest  18,513  in Cintas on October 26, 2024 and sell it today you would earn a total of  1,285  from holding Cintas or generate 6.94% return on investment over 90 days.

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

Siriuspoint  vs.  Cintas

Siriuspoint

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Siriuspoint 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 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 Siriuspoint and Cintas

The main advantage of trading using opposite Siriuspoint and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint 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 Siriuspoint 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.