Correlation Between Wolters Kluwer and Cintas

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

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

Diversification Opportunities for Wolters Kluwer and Cintas

0.18

Correlation Coefficient

Wolters Kluwer  Cintas

Average diversification

The 3 months correlation between Wolters and Cintas is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Wolters Kluwer 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 Wolters Kluwer NV 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 Wolters Kluwer i.e., Wolters Kluwer and Cintas go up and down completely randomly.

Pair Corralation between Wolters Kluwer and Cintas

Assuming the 90 days horizon Wolters Kluwer is expected to generate 1.26 times less return on investment than Cintas. But when comparing it to its historical volatility, Wolters Kluwer NV is 1.09 times less risky than Cintas. It trades about 0.08 of its potential returns per unit of risk. Cintas is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,746  in Cintas on October 12, 2024 and sell it today you would earn a total of  8,519  from holding Cintas or generate 79.28% return on investment over 90 days.

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

Wolters Kluwer NV  vs.  Cintas

Wolters Kluwer NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Wolters Kluwer and Cintas

The main advantage of trading using opposite Wolters Kluwer and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolters Kluwer 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 Wolters Kluwer NV 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.