Correlation Between Cincinnati Financial and PICC Property
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and PICC Property 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 PICC Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and PICC Property and, you can compare the effects of market volatilities on Cincinnati Financial and PICC Property 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 PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and PICC Property.
Diversification Opportunities for Cincinnati Financial and PICC Property
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cincinnati and PICC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property 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 PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and PICC Property go up and down completely randomly.
Pair Corralation between Cincinnati Financial and PICC Property
Assuming the 90 days horizon Cincinnati Financial is expected to generate 1.16 times more return on investment than PICC Property. However, Cincinnati Financial is 1.16 times more volatile than PICC Property and. It trades about 0.39 of its potential returns per unit of risk. PICC Property and is currently generating about 0.03 per unit of risk. If you would invest 12,925 in Cincinnati Financial on September 3, 2024 and sell it today you would earn a total of 2,285 from holding Cincinnati Financial or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. PICC Property and
Performance |
| Timeline |
| Cincinnati Financial |
| PICC Property |
Cincinnati Financial and PICC Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and PICC Property
The main advantage of trading using opposite Cincinnati Financial and PICC Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, PICC Property 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 PICC Property will offset losses from the drop in PICC Property's long position.| Cincinnati Financial vs. JJ SNACK FOODS | Cincinnati Financial vs. Taiwan Semiconductor Manufacturing | Cincinnati Financial vs. ELMOS SEMICONDUCTOR | Cincinnati Financial vs. MOLSON RS BEVERAGE |
| PICC Property vs. LANDSEA HOMES P | PICC Property vs. DFS Furniture PLC | PICC Property vs. Tri Pointe Homes | PICC Property vs. 24SEVENOFFICE GROUP AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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