Correlation Between Cincinnati Financial and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Universal Insurance 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 Cincinnati Financial and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Universal Insurance Holdings, you can compare the effects of market volatilities on Cincinnati Financial and Universal Insurance 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 Cincinnati Financial with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Universal Insurance.
Diversification Opportunities for Cincinnati Financial and Universal Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Universal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and Cincinnati Financial 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 Cincinnati Financial are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Universal Insurance go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Universal Insurance
Assuming the 90 days horizon Cincinnati Financial is expected to generate 2.15 times less return on investment than Universal Insurance. But when comparing it to its historical volatility, Cincinnati Financial is 1.93 times less risky than Universal Insurance. It trades about 0.06 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 905.00 in Universal Insurance Holdings on September 24, 2024 and sell it today you would earn a total of 1,075 from holding Universal Insurance Holdings or generate 118.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Universal Insurance Holdings
Performance |
| Timeline |
| Cincinnati Financial |
| Universal Insurance |
Cincinnati Financial and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Universal Insurance
The main advantage of trading using opposite Cincinnati Financial and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Cincinnati Financial vs. The Progressive | Cincinnati Financial vs. The Allstate | Cincinnati Financial vs. PICC Property and | Cincinnati Financial vs. Markel |
| Universal Insurance vs. The Progressive | Universal Insurance vs. The Allstate | Universal Insurance vs. PICC Property and | Universal Insurance vs. Cincinnati Financial |
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.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |