Correlation Between Cincinnati Financial and Inflection Point
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Inflection Point 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 Inflection Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Inflection Point Acquisition, you can compare the effects of market volatilities on Cincinnati Financial and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Inflection Point.
Diversification Opportunities for Cincinnati Financial and Inflection Point
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cincinnati and Inflection is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Inflection Point go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Inflection Point
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.86 times more return on investment than Inflection Point. However, Cincinnati Financial is 1.16 times less risky than Inflection Point. It trades about 0.12 of its potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.06 per unit of risk. If you would invest 9,442 in Cincinnati Financial on September 21, 2024 and sell it today you would earn a total of 5,015 from holding Cincinnati Financial or generate 53.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Inflection Point Acquisition
Performance |
| Timeline |
| Cincinnati Financial |
| Inflection Point Acq |
Cincinnati Financial and Inflection Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Inflection Point
The main advantage of trading using opposite Cincinnati Financial and Inflection Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Inflection Point 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 Inflection Point will offset losses from the drop in Inflection Point's long position.The idea behind Cincinnati Financial and Inflection Point Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Inflection Point vs. Visa Class A | Inflection Point vs. Deutsche Bank AG | Inflection Point vs. Dynex Capital |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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