Correlation Between Cincinnati Financial and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on Cincinnati Financial and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and SOFI TECHNOLOGIES.
Diversification Opportunities for Cincinnati Financial and SOFI TECHNOLOGIES
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and SOFI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Cincinnati Financial and SOFI TECHNOLOGIES
Assuming the 90 days horizon Cincinnati Financial is expected to under-perform the SOFI TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial is 3.19 times less risky than SOFI TECHNOLOGIES. The stock trades about -0.09 of its potential returns per unit of risk. The SOFI TECHNOLOGIES is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,471 in SOFI TECHNOLOGIES on October 24, 2024 and sell it today you would earn a total of 175.00 from holding SOFI TECHNOLOGIES or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Cincinnati Financial vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| Cincinnati Financial |
| SOFI TECHNOLOGIES |
Cincinnati Financial and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and SOFI TECHNOLOGIES
The main advantage of trading using opposite Cincinnati Financial and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| Cincinnati Financial vs. SEI INVESTMENTS | Cincinnati Financial vs. FIRST SAVINGS FINL | Cincinnati Financial vs. RYU Apparel | Cincinnati Financial vs. SLR Investment Corp |
| SOFI TECHNOLOGIES vs. Universal Insurance Holdings | SOFI TECHNOLOGIES vs. UNIQA INSURANCE GR | SOFI TECHNOLOGIES vs. Charter Communications | SOFI TECHNOLOGIES vs. MOBILE FACTORY 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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