Correlation Between Cincinnati Financial and Oceaneering International
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Oceaneering International 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 Oceaneering International 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 Oceaneering International, you can compare the effects of market volatilities on Cincinnati Financial and Oceaneering International 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 Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Oceaneering International.
Diversification Opportunities for Cincinnati Financial and Oceaneering International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cincinnati and Oceaneering is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International 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 Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Oceaneering International go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Oceaneering International
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.45 times more return on investment than Oceaneering International. However, Cincinnati Financial Corp is 2.2 times less risky than Oceaneering International. It trades about 0.11 of its potential returns per unit of risk. Oceaneering International is currently generating about -0.08 per unit of risk. If you would invest 14,916 in Cincinnati Financial Corp on September 15, 2024 and sell it today you would earn a total of 403.00 from holding Cincinnati Financial Corp or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Oceaneering International
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Oceaneering International |
Cincinnati Financial and Oceaneering International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Oceaneering International
The main advantage of trading using opposite Cincinnati Financial and Oceaneering International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Oceaneering International 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 Oceaneering International will offset losses from the drop in Oceaneering International's long position.| Cincinnati Financial vs. Samsung Electronics Co | Cincinnati Financial vs. Samsung Electronics Co | Cincinnati Financial vs. Hyundai Motor | Cincinnati Financial vs. Reliance Industries Ltd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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