Correlation Between Cincinnati Financial and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY, you can compare the effects of market volatilities on Cincinnati Financial and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and AECOM TECHNOLOGY.
Diversification Opportunities for Cincinnati Financial and AECOM TECHNOLOGY
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cincinnati and AECOM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between Cincinnati Financial and AECOM TECHNOLOGY
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the AECOM TECHNOLOGY. In addition to that, Cincinnati Financial is 1.35 times more volatile than AECOM TECHNOLOGY. It trades about -0.37 of its total potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about -0.16 per unit of volatility. If you would invest 10,573 in AECOM TECHNOLOGY on October 16, 2024 and sell it today you would lose (273.00) from holding AECOM TECHNOLOGY or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| Cincinnati Financial Corp |
| AECOM TECHNOLOGY |
Cincinnati Financial and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and AECOM TECHNOLOGY
The main advantage of trading using opposite Cincinnati Financial and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| Cincinnati Financial vs. Geely Automobile Holdings | Cincinnati Financial vs. MYFAIR GOLD P | Cincinnati Financial vs. CARSALESCOM | Cincinnati Financial vs. DELTA AIR LINES |
| AECOM TECHNOLOGY vs. Federal Agricultural Mortgage | AECOM TECHNOLOGY vs. WIMFARM SA EO | AECOM TECHNOLOGY vs. SLR Investment Corp | AECOM TECHNOLOGY vs. Guangdong Investment Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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