Correlation Between Cincinnati Financial and TFI International
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and TFI International 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 TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and TFI International, you can compare the effects of market volatilities on Cincinnati Financial and TFI International 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 TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and TFI International.
Diversification Opportunities for Cincinnati Financial and TFI International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cincinnati and TFI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and TFI International go up and down completely randomly.
Pair Corralation between Cincinnati Financial and TFI International
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.76 times more return on investment than TFI International. However, Cincinnati Financial is 1.32 times less risky than TFI International. It trades about 0.15 of its potential returns per unit of risk. TFI International is currently generating about 0.07 per unit of risk. If you would invest 9,986 in Cincinnati Financial on September 2, 2024 and sell it today you would earn a total of 5,997 from holding Cincinnati Financial or generate 60.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. TFI International
Performance |
| Timeline |
| Cincinnati Financial |
| TFI International |
Cincinnati Financial and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and TFI International
The main advantage of trading using opposite Cincinnati Financial and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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