Correlation Between Rentokil Initial and Cintas
Can any of the company-specific risk be diversified away by investing in both Rentokil Initial 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 Rentokil Initial and Cintas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rentokil Initial plc and Cintas, you can compare the effects of market volatilities on Rentokil Initial 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 Rentokil Initial with a short position of Cintas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rentokil Initial and Cintas.
Diversification Opportunities for Rentokil Initial and Cintas
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rentokil and Cintas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rentokil Initial plc and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Rentokil Initial 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 Rentokil Initial plc 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 Rentokil Initial i.e., Rentokil Initial and Cintas go up and down completely randomly.
Pair Corralation between Rentokil Initial and Cintas
Assuming the 90 days horizon Rentokil Initial plc is expected to under-perform the Cintas. In addition to that, Rentokil Initial is 2.61 times more volatile than Cintas. It trades about -0.03 of its total potential returns per unit of risk. Cintas is currently generating about 0.14 per unit of volatility. If you would invest 45,883 in Cintas on January 19, 2024 and sell it today you would earn a total of 20,361 from holding Cintas or generate 44.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rentokil Initial plc vs. Cintas
Performance |
| Timeline |
| Rentokil Initial plc |
| Cintas |
Rentokil Initial and Cintas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rentokil Initial and Cintas
The main advantage of trading using opposite Rentokil Initial and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rentokil Initial 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.| Rentokil Initial vs. Aramark Holdings | Rentokil Initial vs. Civeo Corp | Rentokil Initial vs. ABM Industries Incorporated | Rentokil Initial vs. Maximus |
| Cintas vs. ABM Industries Incorporated | Cintas vs. Copart Inc | Cintas vs. Dolby Laboratories | Cintas vs. Relx PLC ADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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