Correlation Between Cintas and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Cintas and Emerson Electric 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 Cintas and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cintas and Emerson Electric, you can compare the effects of market volatilities on Cintas and Emerson Electric 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 Cintas with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and Emerson Electric.
Diversification Opportunities for Cintas and Emerson Electric
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cintas and Emerson is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Cintas 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 Cintas are associated (or correlated) with Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Cintas i.e., Cintas and Emerson Electric go up and down completely randomly.
Pair Corralation between Cintas and Emerson Electric
Given the investment horizon of 90 days Cintas is expected to under-perform the Emerson Electric. But the stock apears to be less risky and, when comparing its historical volatility, Cintas is 1.48 times less risky than Emerson Electric. The stock trades about -0.1 of its potential returns per unit of risk. The Emerson Electric is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,148 in Emerson Electric on September 9, 2025 and sell it today you would earn a total of 591.00 from holding Emerson Electric or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cintas vs. Emerson Electric
Performance |
| Timeline |
| Cintas |
| Emerson Electric |
Cintas and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cintas and Emerson Electric
The main advantage of trading using opposite Cintas and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cintas position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Cintas vs. Thomson Reuters | Cintas vs. Johnson Controls International | Cintas vs. Transdigm Group Incorporated | Cintas vs. Vertiv Holdings Co |
| Emerson Electric vs. Illinois Tool Works | Emerson Electric vs. Howmet Aerospace | Emerson Electric vs. Johnson Controls International | Emerson Electric vs. Waste Management |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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