Correlation Between Superior Plus and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Cincinnati Financial, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Cincinnati Financial.
Diversification Opportunities for Superior Plus and Cincinnati Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Cincinnati is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Superior Plus 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 Superior Plus Corp 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 has no effect on the direction of Superior Plus i.e., Superior Plus and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Superior Plus and Cincinnati Financial
Assuming the 90 days horizon Superior Plus is expected to generate 1.05 times less return on investment than Cincinnati Financial. In addition to that, Superior Plus is 1.48 times more volatile than Cincinnati Financial. It trades about 0.05 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.08 per unit of volatility. If you would invest 13,640 in Cincinnati Financial on October 21, 2024 and sell it today you would earn a total of 230.00 from holding Cincinnati Financial or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Cincinnati Financial
Performance |
| Timeline |
| Superior Plus Corp |
| Cincinnati Financial |
Superior Plus and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Cincinnati Financial
The main advantage of trading using opposite Superior Plus and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. H2O Retailing | Superior Plus vs. Caseys General Stores | Superior Plus vs. MEDCAW INVESTMENTS LS 01 | Superior Plus vs. FAST RETAIL ADR |
| Cincinnati Financial vs. THAI BEVERAGE | Cincinnati Financial vs. DICKS Sporting Goods | Cincinnati Financial vs. Jacquet Metal Service | Cincinnati Financial vs. Transport International Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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