Correlation Between Apple and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Cincinnati Financial Corp, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Cincinnati Financial.
Diversification Opportunities for Apple and Cincinnati Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Cincinnati is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Apple and Cincinnati Financial
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.84 times more return on investment than Cincinnati Financial. However, Apple Inc is 1.19 times less risky than Cincinnati Financial. It trades about -0.16 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.26 per unit of risk. If you would invest 23,690 in Apple Inc on October 13, 2024 and sell it today you would lose (590.00) from holding Apple Inc or give up 2.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Apple Inc |
| Cincinnati Financial Corp |
Apple and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Cincinnati Financial
The main advantage of trading using opposite Apple and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. JD SPORTS FASH | Apple vs. Fukuyama Transporting Co | Apple vs. Transport International Holdings | Apple vs. ADRIATIC METALS LS 013355 |
| Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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