Correlation Between Cincinnati Financial and BAIYU Holdings
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and BAIYU Holdings 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 BAIYU Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and BAIYU Holdings, you can compare the effects of market volatilities on Cincinnati Financial and BAIYU Holdings 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 BAIYU Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and BAIYU Holdings.
Diversification Opportunities for Cincinnati Financial and BAIYU Holdings
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cincinnati and BAIYU is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings 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 BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and BAIYU Holdings go up and down completely randomly.
Pair Corralation between Cincinnati Financial and BAIYU Holdings
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.17 times more return on investment than BAIYU Holdings. However, Cincinnati Financial is 5.76 times less risky than BAIYU Holdings. It trades about 0.06 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.08 per unit of risk. If you would invest 9,882 in Cincinnati Financial on September 12, 2024 and sell it today you would earn a total of 5,101 from holding Cincinnati Financial or generate 51.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Cincinnati Financial vs. BAIYU Holdings
Performance |
| Timeline |
| Cincinnati Financial |
| BAIYU Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cincinnati Financial and BAIYU Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and BAIYU Holdings
The main advantage of trading using opposite Cincinnati Financial and BAIYU Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, BAIYU Holdings 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 BAIYU Holdings will offset losses from the drop in BAIYU Holdings' long position.| Cincinnati Financial vs. Aeye Inc | Cincinnati Financial vs. Ep Emerging Markets | Cincinnati Financial vs. LiCycle Holdings Corp | Cincinnati Financial vs. SEI Investments |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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