Correlation Between Cincinnati Financial and AlphaTime Acquisition
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and AlphaTime Acquisition 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 AlphaTime Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and AlphaTime Acquisition Corp, you can compare the effects of market volatilities on Cincinnati Financial and AlphaTime Acquisition 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 AlphaTime Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and AlphaTime Acquisition.
Diversification Opportunities for Cincinnati Financial and AlphaTime Acquisition
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and AlphaTime is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition 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 AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and AlphaTime Acquisition go up and down completely randomly.
Pair Corralation between Cincinnati Financial and AlphaTime Acquisition
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.17 times more return on investment than AlphaTime Acquisition. However, Cincinnati Financial is 5.85 times less risky than AlphaTime Acquisition. It trades about 0.04 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about -0.33 per unit of risk. If you would invest 15,078 in Cincinnati Financial on September 14, 2024 and sell it today you would earn a total of 138.00 from holding Cincinnati Financial or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.81% |
| Values | Daily Returns |
Cincinnati Financial vs. AlphaTime Acquisition Corp
Performance |
| Timeline |
| Cincinnati Financial |
| AlphaTime Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Cincinnati Financial and AlphaTime Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and AlphaTime Acquisition
The main advantage of trading using opposite Cincinnati Financial and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, AlphaTime Acquisition 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 AlphaTime Acquisition will offset losses from the drop in AlphaTime Acquisition's long position.| Cincinnati Financial vs. W R Berkley | Cincinnati Financial vs. Markel | Cincinnati Financial vs. RLI Corp | Cincinnati Financial vs. CNA Financial |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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