Correlation Between Cincinnati Financial and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Sweetgreen 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 Sweetgreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Sweetgreen, you can compare the effects of market volatilities on Cincinnati Financial and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Sweetgreen.
Diversification Opportunities for Cincinnati Financial and Sweetgreen
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Sweetgreen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Sweetgreen go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Sweetgreen
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.38 times more return on investment than Sweetgreen. However, Cincinnati Financial is 2.64 times less risky than Sweetgreen. It trades about 0.35 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.1 per unit of risk. If you would invest 14,065 in Cincinnati Financial on September 2, 2024 and sell it today you would earn a total of 1,918 from holding Cincinnati Financial or generate 13.64% 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. Sweetgreen
Performance |
| Timeline |
| Cincinnati Financial |
| Sweetgreen |
Cincinnati Financial and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Sweetgreen
The main advantage of trading using opposite Cincinnati Financial and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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