Correlation Between Allstate and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Allstate 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 Allstate and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and Cincinnati Financial, you can compare the effects of market volatilities on Allstate 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 Allstate with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and Cincinnati Financial.
Diversification Opportunities for Allstate and Cincinnati Financial
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allstate and Cincinnati is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Allstate 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 The Allstate 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 Allstate i.e., Allstate and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Allstate and Cincinnati Financial
Assuming the 90 days trading horizon The Allstate is expected to generate 0.94 times more return on investment than Cincinnati Financial. However, The Allstate is 1.06 times less risky than Cincinnati Financial. It trades about 0.0 of its potential returns per unit of risk. Cincinnati Financial is currently generating about -0.11 per unit of risk. If you would invest 2,243 in The Allstate on November 3, 2024 and sell it today you would lose (2.00) from holding The Allstate or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Allstate vs. Cincinnati Financial
Performance |
| Timeline |
| Allstate |
| Cincinnati Financial |
Allstate and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allstate and Cincinnati Financial
The main advantage of trading using opposite Allstate and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate 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.| Allstate vs. The Allstate | Allstate vs. Aspen Insurance Holdings | Allstate vs. AmTrust Financial Services | Allstate vs. Argo Group International |
| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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