Correlation Between Cincinnati Financial and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Deutsche Post 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 Deutsche Post 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 Deutsche Post AG, you can compare the effects of market volatilities on Cincinnati Financial and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Deutsche Post.
Diversification Opportunities for Cincinnati Financial and Deutsche Post
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cincinnati and Deutsche is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Deutsche Post go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Deutsche Post
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.14 times more return on investment than Deutsche Post. However, Cincinnati Financial is 1.14 times more volatile than Deutsche Post AG. It trades about 0.24 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.23 per unit of risk. If you would invest 14,424 in Cincinnati Financial Corp on August 29, 2024 and sell it today you would earn a total of 1,659 from holding Cincinnati Financial Corp or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Deutsche Post AG
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Deutsche Post AG |
Cincinnati Financial and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Deutsche Post
The main advantage of trading using opposite Cincinnati Financial and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.| Cincinnati Financial vs. Lendinvest PLC | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Albion Technology General | Cincinnati Financial vs. Jupiter Fund Management |
| Deutsche Post vs. Lendinvest PLC | Deutsche Post vs. Neometals | Deutsche Post vs. Albion Technology General | Deutsche Post vs. Jupiter Fund Management |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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