Correlation Between 446150AX2 and Cincinnati Financial

Can any of the company-specific risk be diversified away by investing in both 446150AX2 and Cincinnati Financial 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 446150AX2 and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HBAN 2487 15 AUG 36 and Cincinnati Financial, you can compare the effects of market volatilities on 446150AX2 and Cincinnati Financial 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 446150AX2 with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 446150AX2 and Cincinnati Financial.

Diversification Opportunities for 446150AX2 and Cincinnati Financial

0.13

Correlation Coefficient

446150AX2  Cincinnati Financial

Average diversification

The 3 months correlation between 446150AX2 and Cincinnati is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding HBAN 2487 15 AUG 36 and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and 446150AX2 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 HBAN 2487 15 AUG 36 are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of 446150AX2 i.e., 446150AX2 and Cincinnati Financial go up and down completely randomly.

Pair Corralation between 446150AX2 and Cincinnati Financial

Assuming the 90 days trading horizon HBAN 2487 15 AUG 36 is expected to under-perform the Cincinnati Financial. But the bond apears to be less risky and, when comparing its historical volatility, HBAN 2487 15 AUG 36 is 1.01 times less risky than Cincinnati Financial. The bond trades about -0.49 of its potential returns per unit of risk. The Cincinnati Financial is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  15,278  in Cincinnati Financial on October 9, 2024 and sell it today you would lose (1,103) from holding Cincinnati Financial or give up 7.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.68%
Values	Daily Returns

HBAN 2487 15 AUG 36  vs.  Cincinnati Financial

HBAN 2487 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HBAN 2487 15 AUG 36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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 HBAN 2487 15 AUG 36 investors.

Cincinnati Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 5 (%) 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 February 2025.

Pair Trading with 446150AX2 and Cincinnati Financial

The main advantage of trading using opposite 446150AX2 and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 446150AX2 position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.

The idea behind HBAN 2487 15 AUG 36 and Cincinnati Financial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.