Correlation Between Cincinnati Financial and Shell Plc
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Shell Plc 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 Shell Plc 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 Shell plc, you can compare the effects of market volatilities on Cincinnati Financial and Shell Plc 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 Shell Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Shell Plc.
Diversification Opportunities for Cincinnati Financial and Shell Plc
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cincinnati and Shell is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell 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 Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Shell Plc go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Shell Plc
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 1.21 times more return on investment than Shell Plc. However, Cincinnati Financial is 1.21 times more volatile than Shell plc. It trades about 0.1 of its potential returns per unit of risk. Shell plc is currently generating about 0.01 per unit of risk. If you would invest 10,394 in Cincinnati Financial Corp on September 3, 2024 and sell it today you would earn a total of 5,413 from holding Cincinnati Financial Corp or generate 52.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.12% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Shell plc
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Shell plc |
Cincinnati Financial and Shell Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Shell Plc
The main advantage of trading using opposite Cincinnati Financial and Shell Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Shell Plc 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 Shell Plc will offset losses from the drop in Shell Plc's long position.| Cincinnati Financial vs. Catalyst Media Group | Cincinnati Financial vs. CATLIN GROUP | Cincinnati Financial vs. RTW Venture Fund | Cincinnati Financial vs. Secure Property Development |
| Shell Plc vs. Flowtech Fluidpower plc | Shell Plc vs. Fidelity National Information | Shell Plc vs. Gaztransport et Technigaz | Shell Plc vs. Teradata 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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