Correlation Between Team and Cintas

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

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

Diversification Opportunities for Team and Cintas

0.67

Correlation Coefficient

Team  Cintas

Poor diversification

The 3 months correlation between Team and Cintas is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Team 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 Team Inc 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 Team i.e., Team and Cintas go up and down completely randomly.

Pair Corralation between Team and Cintas

Given the investment horizon of 90 days Team Inc is expected to generate 3.88 times more return on investment than Cintas. However, Team is 3.88 times more volatile than Cintas. It trades about 0.07 of its potential returns per unit of risk. Cintas is currently generating about 0.09 per unit of risk. If you would invest  1,465  in Team Inc on December 19, 2024 and sell it today you would earn a total of  185.00  from holding Team Inc or generate 12.63% return on investment over 90 days.

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

Team Inc  vs.  Cintas

Team Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cintas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cintas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Team and Cintas

The main advantage of trading using opposite Team and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team 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 Team Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.