Correlation Between Cincinnati Financial and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Prudential 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 Cincinnati Financial and Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on Cincinnati Financial and Prudential 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 Cincinnati Financial with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Prudential Financial.
Diversification Opportunities for Cincinnati Financial and Prudential Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Prudential is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Prudential Financial go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Prudential Financial
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.08 times more return on investment than Prudential Financial. However, Cincinnati Financial is 1.08 times more volatile than Prudential Financial. It trades about 0.06 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.05 per unit of risk. If you would invest 10,101 in Cincinnati Financial Corp on August 30, 2024 and sell it today you would earn a total of 5,982 from holding Cincinnati Financial Corp or generate 59.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.49% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Prudential Financial
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Prudential Financial |
Cincinnati Financial and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Prudential Financial
The main advantage of trading using opposite Cincinnati Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Cincinnati Financial vs. Lendinvest PLC | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Albion Technology General | Cincinnati Financial vs. Jupiter Fund Management |
| Prudential Financial vs. Lendinvest PLC | Prudential Financial vs. Neometals | Prudential Financial vs. Albion Technology General | Prudential Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |