Correlation Between Cincinnati Financial and Brockhaus Capital
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Brockhaus Capital 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 Brockhaus Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial Corp and Brockhaus Capital Management, you can compare the effects of market volatilities on Cincinnati Financial and Brockhaus Capital 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 Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Brockhaus Capital.
Diversification Opportunities for Cincinnati Financial and Brockhaus Capital
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cincinnati and Brockhaus is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Corp are associated (or correlated) with Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Brockhaus Capital go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Brockhaus Capital
Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 1.96 times less return on investment than Brockhaus Capital. But when comparing it to its historical volatility, Cincinnati Financial Corp is 2.11 times less risky than Brockhaus Capital. It trades about 0.03 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,941 in Brockhaus Capital Management on October 31, 2024 and sell it today you would earn a total of 489.00 from holding Brockhaus Capital Management or generate 25.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Brockhaus Capital Management
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Brockhaus Capital |
Cincinnati Financial and Brockhaus Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Brockhaus Capital
The main advantage of trading using opposite Cincinnati Financial and Brockhaus Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Brockhaus Capital 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 Brockhaus Capital will offset losses from the drop in Brockhaus Capital's long position.| Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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