Correlation Between Cincinnati Financial and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Federal Realty 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 Federal Realty 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 Federal Realty Investment, you can compare the effects of market volatilities on Cincinnati Financial and Federal Realty 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 Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Federal Realty.
Diversification Opportunities for Cincinnati Financial and Federal Realty
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cincinnati and Federal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment 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 Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Federal Realty go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Federal Realty
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.5 times more return on investment than Federal Realty. However, Cincinnati Financial is 1.5 times more volatile than Federal Realty Investment. It trades about 0.06 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.03 per unit of risk. If you would invest 10,309 in Cincinnati Financial Corp on September 4, 2024 and sell it today you would earn a total of 5,498 from holding Cincinnati Financial Corp or generate 53.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.49% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Federal Realty Investment
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Federal Realty Investment |
Cincinnati Financial and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Federal Realty
The main advantage of trading using opposite Cincinnati Financial and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Cincinnati Financial vs. GreenX Metals | Cincinnati Financial vs. Cornish Metals | Cincinnati Financial vs. Hochschild Mining plc | Cincinnati Financial vs. AMG Advanced Metallurgical |
| Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Hyundai Motor | Federal Realty vs. Toyota Motor Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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