Correlation Between Cincinnati Financial and AECOM TECHNOLOGY

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

Diversification Opportunities for Cincinnati Financial and AECOM TECHNOLOGY

CincinnatiAECOMDiversified AwayCincinnatiAECOMDiversified Away100%
0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Cincinnati and AECOM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and AECOM TECHNOLOGY go up and down completely randomly.

Pair Corralation between Cincinnati Financial and AECOM TECHNOLOGY

Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.02 times more return on investment than AECOM TECHNOLOGY. However, Cincinnati Financial is 1.02 times more volatile than AECOM TECHNOLOGY. It trades about 0.08 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.06 per unit of risk. If you would invest  12,830  in Cincinnati Financial Corp on October 20, 2024 and sell it today you would earn a total of  1,045  from holding Cincinnati Financial Corp or generate 8.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Cincinnati Financial Corp  vs.  AECOM TECHNOLOGY

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 5101520
JavaScript chart by amCharts 3.21.15CCJ E6Z
       Timeline  
Cincinnati Financial Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130135140145150
AECOM TECHNOLOGY 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AECOM TECHNOLOGY is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9698100102104106108110

Cincinnati Financial and AECOM TECHNOLOGY Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.25-3.93-2.61-1.30.02321.392.794.185.58 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15CCJ E6Z
       Returns  

Pair Trading with Cincinnati Financial and AECOM TECHNOLOGY

The main advantage of trading using opposite Cincinnati Financial and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.
The idea behind Cincinnati Financial Corp and AECOM TECHNOLOGY 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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