Correlation Between Cincinnati Financial and Corporate Office
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on Cincinnati Financial and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Corporate Office.
Diversification Opportunities for Cincinnati Financial and Corporate Office
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Corporate is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Corporate Office go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Corporate Office
Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 1.3 times less return on investment than Corporate Office. In addition to that, Cincinnati Financial is 1.11 times more volatile than Corporate Office Properties. It trades about 0.1 of its total potential returns per unit of risk. Corporate Office Properties is currently generating about 0.14 per unit of volatility. If you would invest 2,069 in Corporate Office Properties on October 12, 2024 and sell it today you would earn a total of 791.00 from holding Corporate Office Properties or generate 38.23% 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. Corporate Office Properties
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Corporate Office Pro |
Cincinnati Financial and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Corporate Office
The main advantage of trading using opposite Cincinnati Financial and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| Cincinnati Financial vs. COMPUTERSHARE | Cincinnati Financial vs. Rocket Internet SE | Cincinnati Financial vs. Entravision Communications | Cincinnati Financial vs. Grand Canyon Education |
| Corporate Office vs. Benchmark Electronics | Corporate Office vs. Tsingtao Brewery | Corporate Office vs. Thai Beverage Public | Corporate Office vs. Nanjing Panda Electronics |
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 CEOs Directory module to screen CEOs from public companies around the world.
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