Correlation Between Cincinnati Financial and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Teradata Corp 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 Teradata Corp 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 Teradata Corp, you can compare the effects of market volatilities on Cincinnati Financial and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Teradata Corp.
Diversification Opportunities for Cincinnati Financial and Teradata Corp
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cincinnati and Teradata is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Teradata Corp go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Teradata Corp
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the Teradata Corp. In addition to that, Cincinnati Financial is 1.12 times more volatile than Teradata Corp. It trades about -0.4 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.2 per unit of volatility. If you would invest 3,115 in Teradata Corp on September 24, 2024 and sell it today you would earn a total of 125.00 from holding Teradata Corp or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Teradata Corp
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Teradata Corp |
Cincinnati Financial and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Teradata Corp
The main advantage of trading using opposite Cincinnati Financial and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Cincinnati Financial vs. Uniper SE | Cincinnati Financial vs. Mulberry Group PLC | Cincinnati Financial vs. London Security Plc | Cincinnati Financial vs. Triad Group PLC |
| Teradata Corp vs. Cembra Money Bank | Teradata Corp vs. Ally Financial | Teradata Corp vs. Cincinnati Financial Corp | Teradata Corp vs. Synchrony Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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