Correlation Between Cincinnati Financial and Halfords Group
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Halfords Group 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 Halfords Group 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 Halfords Group PLC, you can compare the effects of market volatilities on Cincinnati Financial and Halfords Group 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 Halfords Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Halfords Group.
Diversification Opportunities for Cincinnati Financial and Halfords Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cincinnati and Halfords is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Halfords Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halfords Group PLC 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 Halfords Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halfords Group PLC has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Halfords Group go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Halfords Group
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the Halfords Group. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial Corp is 2.84 times less risky than Halfords Group. The stock trades about -0.03 of its potential returns per unit of risk. The Halfords Group PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14,220 in Halfords Group PLC on September 12, 2024 and sell it today you would earn a total of 540.00 from holding Halfords Group PLC or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Halfords Group PLC
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Halfords Group PLC |
Cincinnati Financial and Halfords Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Halfords Group
The main advantage of trading using opposite Cincinnati Financial and Halfords Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Halfords Group 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 Halfords Group will offset losses from the drop in Halfords Group's long position.| Cincinnati Financial vs. Hong Kong Land | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Coor Service Management | Cincinnati Financial vs. Fidelity Sustainable USD |
| Halfords Group vs. Celebrus Technologies plc | Halfords Group vs. Playtech Plc | Halfords Group vs. Infrastrutture Wireless Italiane | Halfords Group vs. Addtech |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |