Correlation Between Erste Group and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Erste Group 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 Erste Group and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Cincinnati Financial Corp, you can compare the effects of market volatilities on Erste Group 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 Erste Group with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Cincinnati Financial.
Diversification Opportunities for Erste Group and Cincinnati Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erste and Cincinnati is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank 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 Erste Group 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 Erste Group Bank 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 Erste Group i.e., Erste Group and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Erste Group and Cincinnati Financial
Assuming the 90 days trading horizon Erste Group is expected to generate 2.16 times less return on investment than Cincinnati Financial. But when comparing it to its historical volatility, Erste Group Bank is 1.56 times less risky than Cincinnati Financial. It trades about 0.16 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 14,080 in Cincinnati Financial Corp on August 26, 2024 and sell it today you would earn a total of 1,454 from holding Cincinnati Financial Corp or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Erste Group Bank |
| Cincinnati Financial Corp |
Erste Group and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Cincinnati Financial
The main advantage of trading using opposite Erste Group and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group 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.| Erste Group vs. Samsung Electronics Co | Erste Group vs. Samsung Electronics Co | Erste Group vs. Hyundai Motor | Erste Group vs. Toyota Motor Corp |
| Cincinnati Financial vs. Universal Display Corp | Cincinnati Financial vs. Gamma Communications PLC | Cincinnati Financial vs. OneSavings Bank PLC | Cincinnati Financial vs. Royal Bank of |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |