Correlation Between Cincinnati Financial and 05971V2C8

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and 05971V2C8 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 05971V2C8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Financial and BCP 3125 01 JUL 30, you can compare the effects of market volatilities on Cincinnati Financial and 05971V2C8 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 05971V2C8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and 05971V2C8.

Diversification Opportunities for Cincinnati Financial and 05971V2C8

0.37

Correlation Coefficient

Cincinnati Financial  05971V2C8

Weak diversification

The 3 months correlation between Cincinnati and 05971V2C8 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and BCP 3125 01 JUL 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCP 3125 01 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 05971V2C8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCP 3125 01 has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and 05971V2C8 go up and down completely randomly.

Pair Corralation between Cincinnati Financial and 05971V2C8

Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.6 times more return on investment than 05971V2C8. However, Cincinnati Financial is 1.6 times more volatile than BCP 3125 01 JUL 30. It trades about -0.01 of its potential returns per unit of risk. BCP 3125 01 JUL 30 is currently generating about -0.11 per unit of risk. If you would invest  14,045  in Cincinnati Financial on October 25, 2024 and sell it today you would lose (244.00) from holding Cincinnati Financial or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.33%
Values	Daily Returns

Cincinnati Financial  vs.  BCP 3125 01 JUL 30

Cincinnati Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cincinnati Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cincinnati Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BCP 3125 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCP 3125 01 JUL 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BCP 3125 01 JUL 30 investors.

Pair Trading with Cincinnati Financial and 05971V2C8

The main advantage of trading using opposite Cincinnati Financial and 05971V2C8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, 05971V2C8 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 05971V2C8 will offset losses from the drop in 05971V2C8's long position.

The idea behind Cincinnati Financial and BCP 3125 01 JUL 30 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.