Correlation Between Cincinnati Financial and Helium One

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

Diversification Opportunities for Cincinnati Financial and Helium One

-0.24

Correlation Coefficient

Cincinnati Financial  Helium One

Very good diversification

The 3 months correlation between Cincinnati and Helium is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Helium One Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helium One Global 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 Helium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helium One Global has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Helium One go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Helium One

Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 3.85 times less return on investment than Helium One. But when comparing it to its historical volatility, Cincinnati Financial Corp is 10.65 times less risky than Helium One. It trades about 0.1 of its potential returns per unit of risk. Helium One Global is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Helium One Global on September 28, 2024 and sell it today you would lose (199.00) from holding Helium One Global or give up 67.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.26%
Values	Daily Returns

Cincinnati Financial Corp  vs.  Helium One Global

Cincinnati Financial Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Helium One Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helium One Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cincinnati Financial and Helium One

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

The idea behind Cincinnati Financial Corp and Helium One Global 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.