Correlation Between Bellevue Healthcare and Cincinnati Financial

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

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

Diversification Opportunities for Bellevue Healthcare and Cincinnati Financial

-0.57

Correlation Coefficient

Bellevue Healthcare  Cincinnati Financial

Excellent diversification

The 3 months correlation between Bellevue and Cincinnati is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Healthcare Trust and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and Bellevue Healthcare 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 Bellevue Healthcare Trust are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of Bellevue Healthcare i.e., Bellevue Healthcare and Cincinnati Financial go up and down completely randomly.

Pair Corralation between Bellevue Healthcare and Cincinnati Financial

Assuming the 90 days trading horizon Bellevue Healthcare Trust is expected to generate 0.55 times more return on investment than Cincinnati Financial. However, Bellevue Healthcare Trust is 1.83 times less risky than Cincinnati Financial. It trades about 0.35 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.02 per unit of risk. If you would invest  13,860  in Bellevue Healthcare Trust on October 22, 2024 and sell it today you would earn a total of  860.00  from holding Bellevue Healthcare Trust or generate 6.2% return on investment over 90 days.

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

Bellevue Healthcare Trust  vs.  Cincinnati Financial Corp

Bellevue Healthcare Trust

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Healthcare Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cincinnati Financial Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 3 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bellevue Healthcare and Cincinnati Financial

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

The idea behind Bellevue Healthcare Trust and Cincinnati Financial Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.