Correlation Between Cincinnati Financial and Life Insurance
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Life Insurance 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 Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Life Insurance, you can compare the effects of market volatilities on Cincinnati Financial and Life Insurance 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 Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Life Insurance.
Diversification Opportunities for Cincinnati Financial and Life Insurance
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cincinnati and Life is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance 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 Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Life Insurance go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Life Insurance
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.6 times more return on investment than Life Insurance. However, Cincinnati Financial is 1.68 times less risky than Life Insurance. It trades about 0.03 of its potential returns per unit of risk. Life Insurance is currently generating about -0.08 per unit of risk. If you would invest 12,039 in Cincinnati Financial on November 2, 2024 and sell it today you would earn a total of 1,766 from holding Cincinnati Financial or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.97% |
| Values | Daily Returns |
Cincinnati Financial vs. Life Insurance
Performance |
| Timeline |
| Cincinnati Financial |
| Life Insurance |
Cincinnati Financial and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Life Insurance
The main advantage of trading using opposite Cincinnati Financial and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Life Insurance vs. Iridium Communications | Life Insurance vs. Tritent International Agriculture | Life Insurance vs. National CineMedia | Life Insurance vs. MYR Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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