Correlation Between Aquagold International and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and Cincinnati Financial, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Cincinnati Financial.
Diversification Opportunities for Aquagold International and Cincinnati Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aquagold and Cincinnati is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Aquagold International and Cincinnati Financial
Given the investment horizon of 90 days Aquagold International is expected to under-perform the Cincinnati Financial. In addition to that, Aquagold International is 15.77 times more volatile than Cincinnati Financial. It trades about -0.23 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about -0.28 per unit of volatility. If you would invest 15,278 in Cincinnati Financial on October 9, 2024 and sell it today you would lose (1,103) from holding Cincinnati Financial or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquagold International vs. Cincinnati Financial
Performance |
| Timeline |
| Aquagold International |
| Cincinnati Financial |
Aquagold International and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquagold International and Cincinnati Financial
The main advantage of trading using opposite Aquagold International and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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