Correlation Between Cincinnati Financial and Eagle Pointome
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Eagle Pointome 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 Eagle Pointome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Eagle Pointome, you can compare the effects of market volatilities on Cincinnati Financial and Eagle Pointome 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 Eagle Pointome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Eagle Pointome.
Diversification Opportunities for Cincinnati Financial and Eagle Pointome
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cincinnati and Eagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Eagle Pointome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pointome 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 Eagle Pointome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pointome has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Eagle Pointome go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Eagle Pointome
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 6.59 times more return on investment than Eagle Pointome. However, Cincinnati Financial is 6.59 times more volatile than Eagle Pointome. It trades about 0.29 of its potential returns per unit of risk. Eagle Pointome is currently generating about 0.15 per unit of risk. If you would invest 14,344 in Cincinnati Financial on August 31, 2024 and sell it today you would earn a total of 1,672 from holding Cincinnati Financial or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Eagle Pointome
Performance |
| Timeline |
| Cincinnati Financial |
| Eagle Pointome |
Cincinnati Financial and Eagle Pointome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Eagle Pointome
The main advantage of trading using opposite Cincinnati Financial and Eagle Pointome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Eagle Pointome 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 Eagle Pointome will offset losses from the drop in Eagle Pointome's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. The Allstate | Cincinnati Financial vs. Selective Insurance Group |
| Eagle Pointome vs. Cumberland Pharmaceuticals | Eagle Pointome vs. Electrovaya Common Shares | Eagle Pointome vs. Merit Medical Systems | Eagle Pointome vs. Xponential Fitness |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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