Correlation Between Cincinnati Financial and INTERNET INJPADR
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and INTERNET INJPADR 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 INTERNET INJPADR 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 INTERNET INJPADR 1, you can compare the effects of market volatilities on Cincinnati Financial and INTERNET INJPADR 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 INTERNET INJPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and INTERNET INJPADR.
Diversification Opportunities for Cincinnati Financial and INTERNET INJPADR
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and INTERNET is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and INTERNET INJPADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNET INJPADR 1 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 INTERNET INJPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNET INJPADR 1 has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and INTERNET INJPADR go up and down completely randomly.
Pair Corralation between Cincinnati Financial and INTERNET INJPADR
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.56 times more return on investment than INTERNET INJPADR. However, Cincinnati Financial Corp is 1.79 times less risky than INTERNET INJPADR. It trades about 0.04 of its potential returns per unit of risk. INTERNET INJPADR 1 is currently generating about 0.02 per unit of risk. If you would invest 10,013 in Cincinnati Financial Corp on October 26, 2024 and sell it today you would earn a total of 2,987 from holding Cincinnati Financial Corp or generate 29.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. INTERNET INJPADR 1
Performance |
| Timeline |
| Cincinnati Financial Corp |
| INTERNET INJPADR 1 |
Cincinnati Financial and INTERNET INJPADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and INTERNET INJPADR
The main advantage of trading using opposite Cincinnati Financial and INTERNET INJPADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, INTERNET INJPADR 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 INTERNET INJPADR will offset losses from the drop in INTERNET INJPADR's long position.| Cincinnati Financial vs. NTT DATA | Cincinnati Financial vs. Datadog | Cincinnati Financial vs. Keck Seng Investments | Cincinnati Financial vs. DATATEC LTD 2 |
| INTERNET INJPADR vs. Harmony Gold Mining | INTERNET INJPADR vs. ADRIATIC METALS LS 013355 | INTERNET INJPADR vs. MAGNUM MINING EXP | INTERNET INJPADR vs. Perseus Mining 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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