Correlation Between United Insurance and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both United Insurance 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 United Insurance and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Cincinnati Financial Corp, you can compare the effects of market volatilities on United Insurance 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 United Insurance with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Cincinnati Financial.
Diversification Opportunities for United Insurance and Cincinnati Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Cincinnati is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings 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 United Insurance 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 United Insurance Holdings 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 United Insurance i.e., United Insurance and Cincinnati Financial go up and down completely randomly.
Pair Corralation between United Insurance and Cincinnati Financial
Assuming the 90 days horizon United Insurance Holdings is expected to generate 5.17 times more return on investment than Cincinnati Financial. However, United Insurance is 5.17 times more volatile than Cincinnati Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.04 per unit of risk. If you would invest 213.00 in United Insurance Holdings on October 26, 2024 and sell it today you would earn a total of 937.00 from holding United Insurance Holdings or generate 439.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Insurance Holdings vs. Cincinnati Financial Corp
Performance |
| Timeline |
| United Insurance Holdings |
| Cincinnati Financial Corp |
United Insurance and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Cincinnati Financial
The main advantage of trading using opposite United Insurance and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance 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.| United Insurance vs. PICC Property and | United Insurance vs. Fairfax Financial Holdings | United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group |
| Cincinnati Financial vs. NTT DATA | Cincinnati Financial vs. Datadog | Cincinnati Financial vs. Keck Seng Investments | Cincinnati Financial vs. DATATEC LTD 2 |
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.
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