Correlation Between Cincinnati Financial and St Galler

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

By analyzing existing cross correlation between Cincinnati Financial Corp and St Galler Kantonalbank, you can compare the effects of market volatilities on Cincinnati Financial and St Galler 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 Cincinnati Financial with a short position of St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and St Galler.

Diversification Opportunities for Cincinnati Financial and St Galler

0.17

Correlation Coefficient

Cincinnati Financial  St Galler

Average diversification

The 3 months correlation between Cincinnati and 0QQZ is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank and Cincinnati Financial 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 Cincinnati Financial Corp are associated (or correlated) with St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and St Galler go up and down completely randomly.

Pair Corralation between Cincinnati Financial and St Galler

Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 3.65 times less return on investment than St Galler. In addition to that, Cincinnati Financial is 2.48 times more volatile than St Galler Kantonalbank. It trades about 0.03 of its total potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.23 per unit of volatility. If you would invest  43,700  in St Galler Kantonalbank on December 26, 2024 and sell it today you would earn a total of  4,600  from holding St Galler Kantonalbank or generate 10.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Cincinnati Financial Corp  vs.  St Galler Kantonalbank

Cincinnati Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cincinnati Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

St Galler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, St Galler may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cincinnati Financial and St Galler

The main advantage of trading using opposite Cincinnati Financial and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, St Galler 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 St Galler will offset losses from the drop in St Galler's long position.

The idea behind Cincinnati Financial Corp and St Galler Kantonalbank 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 Stocks Directory module to find actively traded stocks across global markets.