Correlation Between ARISTOCRAT LEISURE and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Cincinnati Financial Corp, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Cincinnati Financial.
Diversification Opportunities for ARISTOCRAT LEISURE and Cincinnati Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and Cincinnati is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Cincinnati Financial go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Cincinnati Financial
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.77 times more return on investment than Cincinnati Financial. However, ARISTOCRAT LEISURE is 1.3 times less risky than Cincinnati Financial. It trades about 0.12 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 2,206 in ARISTOCRAT LEISURE on October 27, 2024 and sell it today you would earn a total of 1,894 from holding ARISTOCRAT LEISURE or generate 85.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Cincinnati Financial Corp
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Cincinnati Financial Corp |
ARISTOCRAT LEISURE and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Cincinnati Financial
The main advantage of trading using opposite ARISTOCRAT LEISURE and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| 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 | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |