Correlation Between Cincinnati Financial and JD Sports
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and JD Sports Fashion, you can compare the effects of market volatilities on Cincinnati Financial and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and JD Sports.
Diversification Opportunities for Cincinnati Financial and JD Sports
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cincinnati and JDDSF is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and JD Sports go up and down completely randomly.
Pair Corralation between Cincinnati Financial and JD Sports
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.47 times more return on investment than JD Sports. However, Cincinnati Financial is 2.15 times less risky than JD Sports. It trades about 0.14 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.01 per unit of risk. If you would invest 10,538 in Cincinnati Financial on September 3, 2024 and sell it today you would earn a total of 5,445 from holding Cincinnati Financial or generate 51.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. JD Sports Fashion
Performance |
| Timeline |
| Cincinnati Financial |
| JD Sports Fashion |
Cincinnati Financial and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and JD Sports
The main advantage of trading using opposite Cincinnati Financial and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
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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