Correlation Between Cincinnati Financial and Tungsten West
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Tungsten West 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 Tungsten West 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 Tungsten West PLC, you can compare the effects of market volatilities on Cincinnati Financial and Tungsten West 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 Tungsten West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Tungsten West.
Diversification Opportunities for Cincinnati Financial and Tungsten West
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cincinnati and Tungsten is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Tungsten West PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tungsten West 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 Tungsten West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tungsten West PLC has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Tungsten West go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Tungsten West
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the Tungsten West. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial Corp is 3.29 times less risky than Tungsten West. The stock trades about -0.01 of its potential returns per unit of risk. The Tungsten West PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 275.00 in Tungsten West PLC on November 28, 2024 and sell it today you would earn a total of 38.00 from holding Tungsten West PLC or generate 13.82% 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. Tungsten West PLC
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Tungsten West PLC |
Cincinnati Financial and Tungsten West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Tungsten West
The main advantage of trading using opposite Cincinnati Financial and Tungsten West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Tungsten West 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 Tungsten West will offset losses from the drop in Tungsten West's long position.| Cincinnati Financial vs. Costco Wholesale Corp | Cincinnati Financial vs. Cairo Communication SpA | Cincinnati Financial vs. Rosslyn Data Technologies | Cincinnati Financial vs. Automatic Data Processing |
| Tungsten West vs. Resolute Mining Limited | Tungsten West vs. First Class Metals | Tungsten West vs. Global Net Lease | Tungsten West vs. Micron Technology |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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