Correlation Between Cincinnati Financial and Apple

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

Diversification Opportunities for Cincinnati Financial and Apple

0.44

Correlation Coefficient

Cincinnati Financial  Apple

Very weak diversification

The 3 months correlation between Cincinnati and Apple is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Apple go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Apple

Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.77 times more return on investment than Apple. However, Cincinnati Financial Corp is 1.3 times less risky than Apple. It trades about -0.03 of its potential returns per unit of risk. Apple Inc is currently generating about -0.16 per unit of risk. If you would invest  13,915  in Cincinnati Financial Corp on December 24, 2024 and sell it today you would lose (475.00) from holding Cincinnati Financial Corp or give up 3.41% of portfolio value over 90 days.

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

Cincinnati Financial Corp  vs.  Apple Inc

Cincinnati Financial Corp

Risk-Adjusted Performance

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.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc 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 fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cincinnati Financial and Apple

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

The idea behind Cincinnati Financial Corp and Apple Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.