Correlation Between DXC Technology and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both DXC Technology and Cincinnati Financial 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 DXC Technology and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and Cincinnati Financial Corp, you can compare the effects of market volatilities on DXC Technology and Cincinnati Financial 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 DXC Technology with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and Cincinnati Financial.
Diversification Opportunities for DXC Technology and Cincinnati Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and Cincinnati is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and DXC Technology 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 DXC Technology Co are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of DXC Technology i.e., DXC Technology and Cincinnati Financial go up and down completely randomly.
Pair Corralation between DXC Technology and Cincinnati Financial
Assuming the 90 days trading horizon DXC Technology is expected to generate 14.34 times less return on investment than Cincinnati Financial. In addition to that, DXC Technology is 1.32 times more volatile than Cincinnati Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.06 per unit of volatility. If you would invest 10,315 in Cincinnati Financial Corp on September 3, 2024 and sell it today you would earn a total of 5,492 from holding Cincinnati Financial Corp or generate 53.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.66% |
| Values | Daily Returns |
DXC Technology Co vs. Cincinnati Financial Corp
Performance |
| Timeline |
| DXC Technology |
| Cincinnati Financial Corp |
DXC Technology and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and Cincinnati Financial
The main advantage of trading using opposite DXC Technology and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| DXC Technology vs. Home Depot | DXC Technology vs. Synthomer plc | DXC Technology vs. DFS Furniture PLC | DXC Technology vs. Westlake Chemical Corp |
| Cincinnati Financial vs. Catalyst Media Group | Cincinnati Financial vs. CATLIN GROUP | Cincinnati Financial vs. RTW Venture Fund | Cincinnati Financial vs. Secure Property Development |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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