Correlation Between Cincinnati Financial and Evolution Gaming

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Evolution Gaming 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 Evolution Gaming 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 Evolution Gaming Group, you can compare the effects of market volatilities on Cincinnati Financial and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Evolution Gaming.

Diversification Opportunities for Cincinnati Financial and Evolution Gaming

0.36

Correlation Coefficient

Cincinnati Financial  Evolution Gaming

Weak diversification

The 3 months correlation between Cincinnati and Evolution is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Evolution Gaming go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Evolution Gaming

Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the Evolution Gaming. In addition to that, Cincinnati Financial is 1.03 times more volatile than Evolution Gaming Group. It trades about -0.15 of its total potential returns per unit of risk. Evolution Gaming Group is currently generating about 0.03 per unit of volatility. If you would invest  81,880  in Evolution Gaming Group on October 25, 2024 and sell it today you would earn a total of  640.00  from holding Evolution Gaming Group or generate 0.78% return on investment over 90 days.

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

Cincinnati Financial Corp  vs.  Evolution Gaming Group

Cincinnati Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cincinnati Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cincinnati Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cincinnati Financial and Evolution Gaming

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

The idea behind Cincinnati Financial Corp and Evolution Gaming Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.