Correlation Between Cincinnati Financial and Southern
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Southern 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 Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Southern Co, you can compare the effects of market volatilities on Cincinnati Financial and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Southern.
Diversification Opportunities for Cincinnati Financial and Southern
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cincinnati and Southern is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Southern go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Southern
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.69 times more return on investment than Southern. However, Cincinnati Financial is 1.69 times more volatile than Southern Co. It trades about 0.09 of its potential returns per unit of risk. Southern Co is currently generating about 0.01 per unit of risk. If you would invest 9,912 in Cincinnati Financial on September 12, 2024 and sell it today you would earn a total of 5,071 from holding Cincinnati Financial or generate 51.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Southern Co
Performance |
| Timeline |
| Cincinnati Financial |
| Southern |
Cincinnati Financial and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Southern
The main advantage of trading using opposite Cincinnati Financial and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Cincinnati Financial vs. Aeye Inc | Cincinnati Financial vs. Ep Emerging Markets | Cincinnati Financial vs. LiCycle Holdings Corp | Cincinnati Financial vs. SEI Investments |
| Southern vs. Old Republic International | Southern vs. Cincinnati Financial | Southern vs. QBE Insurance Group | Southern vs. Sphere Entertainment Co |
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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