Correlation Between St Galler and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both St Galler 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 St Galler and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St Galler Kantonalbank and Cincinnati Financial Corp, you can compare the effects of market volatilities on St Galler 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 St Galler with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and Cincinnati Financial.
Diversification Opportunities for St Galler and Cincinnati Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0QQZ and Cincinnati is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank 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 St Galler 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 St Galler Kantonalbank 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 St Galler i.e., St Galler and Cincinnati Financial go up and down completely randomly.
Pair Corralation between St Galler and Cincinnati Financial
Assuming the 90 days trading horizon St Galler Kantonalbank is expected to under-perform the Cincinnati Financial. But the stock apears to be less risky and, when comparing its historical volatility, St Galler Kantonalbank is 2.67 times less risky than Cincinnati Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Cincinnati Financial Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,101 in Cincinnati Financial Corp on August 30, 2024 and sell it today you would earn a total of 5,982 from holding Cincinnati Financial Corp or generate 59.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.57% |
| Values | Daily Returns |
St Galler Kantonalbank vs. Cincinnati Financial Corp
Performance |
| Timeline |
| St Galler Kantonalbank |
| Cincinnati Financial Corp |
St Galler and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St Galler and Cincinnati Financial
The main advantage of trading using opposite St Galler and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St Galler 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.| St Galler vs. Lendinvest PLC | St Galler vs. Neometals | St Galler vs. Albion Technology General | St Galler vs. Jupiter Fund Management |
| Cincinnati Financial vs. Lendinvest PLC | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Albion Technology General | Cincinnati Financial vs. Jupiter Fund Management |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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