Correlation Between Cincinnati Financial and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Bridgford Foods 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 Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Bridgford Foods, you can compare the effects of market volatilities on Cincinnati Financial and Bridgford Foods 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 Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Bridgford Foods.
Diversification Opportunities for Cincinnati Financial and Bridgford Foods
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cincinnati and Bridgford is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods 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 Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Bridgford Foods go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Bridgford Foods
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.59 times more return on investment than Bridgford Foods. However, Cincinnati Financial is 1.69 times less risky than Bridgford Foods. It trades about 0.07 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.01 per unit of risk. If you would invest 10,120 in Cincinnati Financial on August 27, 2024 and sell it today you would earn a total of 5,527 from holding Cincinnati Financial or generate 54.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Cincinnati Financial vs. Bridgford Foods
Performance |
| Timeline |
| Cincinnati Financial |
| Bridgford Foods |
Cincinnati Financial and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Bridgford Foods
The main advantage of trading using opposite Cincinnati Financial and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Bridgford Foods 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 Bridgford Foods will offset losses from the drop in Bridgford Foods' long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Bridgford Foods vs. Bellring Brands LLC | Bridgford Foods vs. Ingredion Incorporated | Bridgford Foods vs. Nomad Foods | Bridgford Foods vs. Post 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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