Correlation Between RB Global and Cintas

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

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

Diversification Opportunities for RB Global and Cintas

0.58

Correlation Coefficient

RB Global  Cintas

Very weak diversification

The 3 months correlation between RBA and Cintas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and RB Global 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 RB Global 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 RB Global i.e., RB Global and Cintas go up and down completely randomly.

Pair Corralation between RB Global and Cintas

Considering the 90-day investment horizon RB Global is expected to under-perform the Cintas. But the stock apears to be less risky and, when comparing its historical volatility, RB Global is 1.39 times less risky than Cintas. The stock trades about -0.37 of its potential returns per unit of risk. The Cintas is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  68,054  in Cintas on January 31, 2024 and sell it today you would lose (1,471) from holding Cintas or give up 2.16% of portfolio value over 90 days.

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

RB Global  vs.  Cintas

RB Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RB Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, RB Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Cintas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cintas may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with RB Global and Cintas

The main advantage of trading using opposite RB Global and Cintas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Global 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 RB Global 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.