Correlation Between Cincinnati Financial and 98138HAJ0

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and 98138HAJ0 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 98138HAJ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Financial and WDAY 38 01 APR 32, you can compare the effects of market volatilities on Cincinnati Financial and 98138HAJ0 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 98138HAJ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and 98138HAJ0.

Diversification Opportunities for Cincinnati Financial and 98138HAJ0

-0.45

Correlation Coefficient

Cincinnati Financial  98138HAJ0

Very good diversification

The 3 months correlation between Cincinnati and 98138HAJ0 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and WDAY 38 01 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WDAY 38 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 98138HAJ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WDAY 38 01 has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and 98138HAJ0 go up and down completely randomly.

Pair Corralation between Cincinnati Financial and 98138HAJ0

Given the investment horizon of 90 days Cincinnati Financial is expected to under-perform the 98138HAJ0. In addition to that, Cincinnati Financial is 1.74 times more volatile than WDAY 38 01 APR 32. It trades about -0.3 of its total potential returns per unit of risk. WDAY 38 01 APR 32 is currently generating about -0.19 per unit of volatility. If you would invest  9,237  in WDAY 38 01 APR 32 on September 26, 2024 and sell it today you would lose (301.00) from holding WDAY 38 01 APR 32 or give up 3.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Cincinnati Financial  vs.  WDAY 38 01 APR 32

Cincinnati Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WDAY 38 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WDAY 38 01 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 98138HAJ0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cincinnati Financial and 98138HAJ0

The main advantage of trading using opposite Cincinnati Financial and 98138HAJ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, 98138HAJ0 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 98138HAJ0 will offset losses from the drop in 98138HAJ0's long position.

The idea behind Cincinnati Financial and WDAY 38 01 APR 32 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.