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
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allstate and Cincinnati is 0.75. 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
Considering the 90-day investment horizon Allstate is expected to generate 1.08 times less return on investment than Cincinnati Financial. But when comparing it to its historical volatility, The Allstate is 1.03 times less risky than Cincinnati Financial. It trades about 0.14 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 9,799 in Cincinnati Financial on August 24, 2024 and sell it today you would earn a total of 5,686 from holding Cincinnati Financial or generate 58.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| 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. Small Cap Core | Allstate vs. FitLife Brands, Common | Allstate vs. Mutual Of America | Allstate vs. Gfl Environmental Holdings |
| Cincinnati Financial vs. Small Cap Core | Cincinnati Financial vs. FitLife Brands, Common | Cincinnati Financial vs. Mutual Of America | Cincinnati Financial vs. Gfl Environmental 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |