Correlation Between Cincinnati Financial and NB Private
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and NB Private 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 NB Private 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 NB Private Equity, you can compare the effects of market volatilities on Cincinnati Financial and NB Private 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 NB Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and NB Private.
Diversification Opportunities for Cincinnati Financial and NB Private
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cincinnati and NBPE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and NB Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NB Private Equity 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 NB Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NB Private Equity has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and NB Private go up and down completely randomly.
Pair Corralation between Cincinnati Financial and NB Private
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.15 times more return on investment than NB Private. However, Cincinnati Financial is 1.15 times more volatile than NB Private Equity. It trades about 0.12 of its potential returns per unit of risk. NB Private Equity is currently generating about 0.02 per unit of risk. If you would invest 10,064 in Cincinnati Financial Corp on September 14, 2024 and sell it today you would earn a total of 5,148 from holding Cincinnati Financial Corp or generate 51.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. NB Private Equity
Performance |
| Timeline |
| Cincinnati Financial Corp |
| NB Private Equity |
Cincinnati Financial and NB Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and NB Private
The main advantage of trading using opposite Cincinnati Financial and NB Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, NB Private 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 NB Private will offset losses from the drop in NB Private's long position.| Cincinnati Financial vs. Systemair AB | Cincinnati Financial vs. Vitec Software Group | Cincinnati Financial vs. Foresight Environmental Infrastructure | Cincinnati Financial vs. Tata Steel Limited |
| NB Private vs. Neometals | NB Private vs. Verizon Communications | NB Private vs. Silvercorp Metals | NB Private vs. Zoom Video Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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