Correlation Between Cairo Communication and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Cairo Communication 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 Cairo Communication and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and Cincinnati Financial Corp, you can compare the effects of market volatilities on Cairo Communication 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 Cairo Communication with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Cincinnati Financial.
Diversification Opportunities for Cairo Communication and Cincinnati Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairo and Cincinnati is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA 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 Cairo Communication 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 Cairo Communication SpA 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 Cairo Communication i.e., Cairo Communication and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Cairo Communication and Cincinnati Financial
Assuming the 90 days trading horizon Cairo Communication is expected to generate 3.07 times less return on investment than Cincinnati Financial. But when comparing it to its historical volatility, Cairo Communication SpA is 1.27 times less risky than Cincinnati Financial. It trades about 0.09 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Cairo Communication SpA |
| Cincinnati Financial Corp |
Cairo Communication and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Cincinnati Financial
The main advantage of trading using opposite Cairo Communication and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication 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.| Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Hyundai Motor | Cairo Communication 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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