Correlation Between Cincinnati Financial and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Cincinnati Financial and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Advanced Medical.
Diversification Opportunities for Cincinnati Financial and Advanced Medical
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cincinnati and Advanced is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Advanced Medical go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Advanced Medical
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.79 times more return on investment than Advanced Medical. However, Cincinnati Financial Corp is 1.27 times less risky than Advanced Medical. It trades about 0.31 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.2 per unit of risk. If you would invest 13,854 in Cincinnati Financial Corp on September 4, 2024 and sell it today you would earn a total of 1,953 from holding Cincinnati Financial Corp or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Advanced Medical Solutions
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Advanced Medical Sol |
Cincinnati Financial and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Advanced Medical
The main advantage of trading using opposite Cincinnati Financial and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical'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 |
| Advanced Medical vs. Samsung Electronics Co | Advanced Medical vs. Samsung Electronics Co | Advanced Medical vs. Hyundai Motor | Advanced Medical 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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