Correlation Between Bank of Ireland and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland 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 Bank of Ireland and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Ireland and Cincinnati Financial Corp, you can compare the effects of market volatilities on Bank of Ireland 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 Bank of Ireland with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Cincinnati Financial.
Diversification Opportunities for Bank of Ireland and Cincinnati Financial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Cincinnati is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland i.e., Bank of Ireland and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Bank of Ireland and Cincinnati Financial
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 4.89 times less return on investment than Cincinnati Financial. In addition to that, Bank of Ireland is 1.12 times more volatile than Cincinnati Financial Corp. It trades about 0.01 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.06 per unit of volatility. If you would invest 10,333 in Cincinnati Financial Corp on August 31, 2024 and sell it today you would earn a total of 5,750 from holding Cincinnati Financial Corp or generate 55.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.92% |
| Values | Daily Returns |
Bank of Ireland vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Bank of Ireland |
| Cincinnati Financial Corp |
Bank of Ireland and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Cincinnati Financial
The main advantage of trading using opposite Bank of Ireland and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland 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.| Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Hyundai Motor | Bank of Ireland vs. Toyota Motor Corp |
| Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Coor Service Management | Cincinnati Financial vs. Aeorema Communications Plc | Cincinnati Financial vs. JLEN Environmental Assets |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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