Correlation Between Cincinnati Financial and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Aegon NV 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 Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Aegon NV ADR, you can compare the effects of market volatilities on Cincinnati Financial and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Aegon NV.
Diversification Opportunities for Cincinnati Financial and Aegon NV
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Aegon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 are associated (or correlated) with Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Aegon NV go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Aegon NV
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.02 times more return on investment than Aegon NV. However, Cincinnati Financial is 1.02 times more volatile than Aegon NV ADR. It trades about 0.18 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.06 per unit of risk. If you would invest 13,203 in Cincinnati Financial on August 23, 2024 and sell it today you would earn a total of 2,282 from holding Cincinnati Financial or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Aegon NV ADR
Performance |
| Timeline |
| Cincinnati Financial |
| Aegon NV ADR |
Cincinnati Financial and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Aegon NV
The main advantage of trading using opposite Cincinnati Financial and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Cincinnati Financial vs. Small Cap Core | Cincinnati Financial vs. FitLife Brands, Common | Cincinnati Financial vs. Mutual Of America | Cincinnati Financial vs. Gfl Environmental Holdings |
| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Enstar Group Limited | Aegon NV vs. American International Group | Aegon NV vs. Axa Equitable Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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