Correlation Between Cincinnati Financial and Penn National
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Penn National 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 Penn National 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 Penn National Gaming, you can compare the effects of market volatilities on Cincinnati Financial and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Penn National.
Diversification Opportunities for Cincinnati Financial and Penn National
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cincinnati and Penn is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Penn National go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Penn National
Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 2.22 times less return on investment than Penn National. But when comparing it to its historical volatility, Cincinnati Financial Corp is 1.84 times less risky than Penn National. It trades about 0.06 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,663 in Penn National Gaming on November 2, 2024 and sell it today you would earn a total of 322.00 from holding Penn National Gaming or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Penn National Gaming
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Penn National Gaming |
Cincinnati Financial and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Penn National
The main advantage of trading using opposite Cincinnati Financial and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc |
| Penn National vs. Caseys General Stores | Penn National vs. Materialise NV | Penn National vs. THRACE PLASTICS | Penn National vs. Sumitomo Rubber Industries |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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