Correlation Between Cincinnati Financial and Better Home
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Better Home 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 Better Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Better Home Finance, you can compare the effects of market volatilities on Cincinnati Financial and Better Home 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 Better Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Better Home.
Diversification Opportunities for Cincinnati Financial and Better Home
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cincinnati and Better is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Better Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Home Finance 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 are associated (or correlated) with Better Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Home Finance has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Better Home go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Better Home
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 34.57 times less return on investment than Better Home. But when comparing it to its historical volatility, Cincinnati Financial is 13.46 times less risky than Better Home. It trades about 0.03 of its potential returns per unit of risk. Better Home Finance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Better Home Finance on December 29, 2024 and sell it today you would lose (1.34) from holding Better Home Finance or give up 12.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 70.49% |
Values | Daily Returns |
Cincinnati Financial vs. Better Home Finance
Performance |
Timeline |
Cincinnati Financial |
Better Home Finance |
Cincinnati Financial and Better Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cincinnati Financial and Better Home
The main advantage of trading using opposite Cincinnati Financial and Better Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Better Home 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 Better Home will offset losses from the drop in Better Home's long position.Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
Better Home vs. Webus International Limited | Better Home vs. Procter Gamble | Better Home vs. ioneer Ltd American | Better Home vs. Joby Aviation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Bonds Directory Find actively traded corporate debentures issued by US companies |