Correlation Between Cincinnati Financial and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Hooker Furniture 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 Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Hooker Furniture, you can compare the effects of market volatilities on Cincinnati Financial and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Hooker Furniture.
Diversification Opportunities for Cincinnati Financial and Hooker Furniture
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Hooker is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Hooker Furniture go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Hooker Furniture
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.16 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, Cincinnati Financial is 1.82 times less risky than Hooker Furniture. It trades about 0.35 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,626 in Hooker Furniture on September 2, 2024 and sell it today you would earn a total of 247.00 from holding Hooker Furniture or generate 15.19% 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. Hooker Furniture
Performance |
| Timeline |
| Cincinnati Financial |
| Hooker Furniture |
Cincinnati Financial and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Hooker Furniture
The main advantage of trading using opposite Cincinnati Financial and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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