Correlation Between Cincinnati Financial and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Cincinnati Financial and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Livermore Investments.
Diversification Opportunities for Cincinnati Financial and Livermore Investments
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Livermore is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Livermore Investments go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Livermore Investments
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.06 times more return on investment than Livermore Investments. However, Cincinnati Financial is 1.06 times more volatile than Livermore Investments Group. It trades about 0.05 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.04 per unit of risk. If you would invest 10,226 in Cincinnati Financial Corp on August 24, 2024 and sell it today you would earn a total of 5,308 from holding Cincinnati Financial Corp or generate 51.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.57% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Livermore Investments Group
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Livermore Investments |
Cincinnati Financial and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Livermore Investments
The main advantage of trading using opposite Cincinnati Financial and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| Cincinnati Financial vs. Verizon Communications | Cincinnati Financial vs. Batm Advanced Communications | Cincinnati Financial vs. Axway Software SA | Cincinnati Financial vs. Charter Communications Cl |
| Livermore Investments vs. Vienna Insurance Group | Livermore Investments vs. Cincinnati Financial Corp | Livermore Investments vs. Synchrony Financial | Livermore Investments vs. Evolution Gaming Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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