Correlation Between Cincinnati Financial and Tandem Diabetes
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Tandem Diabetes 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 Tandem Diabetes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Tandem Diabetes Care, you can compare the effects of market volatilities on Cincinnati Financial and Tandem Diabetes 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 Tandem Diabetes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Tandem Diabetes.
Diversification Opportunities for Cincinnati Financial and Tandem Diabetes
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cincinnati and Tandem is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care 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 Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Tandem Diabetes go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Tandem Diabetes
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.47 times more return on investment than Tandem Diabetes. However, Cincinnati Financial is 2.15 times less risky than Tandem Diabetes. It trades about 0.35 of its potential returns per unit of risk. Tandem Diabetes Care is currently generating about -0.01 per unit of risk. If you would invest 14,083 in Cincinnati Financial on September 1, 2024 and sell it today you would earn a total of 1,900 from holding Cincinnati Financial or generate 13.49% 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. Tandem Diabetes Care
Performance |
| Timeline |
| Cincinnati Financial |
| Tandem Diabetes Care |
Cincinnati Financial and Tandem Diabetes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Tandem Diabetes
The main advantage of trading using opposite Cincinnati Financial and Tandem Diabetes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Tandem Diabetes 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 Tandem Diabetes will offset losses from the drop in Tandem Diabetes' long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. W R Berkley | Cincinnati Financial vs. Selective Insurance Group |
| Tandem Diabetes vs. Profound Medical Corp | Tandem Diabetes vs. Si Bone | Tandem Diabetes vs. Nevro Corp | Tandem Diabetes vs. Paragon 28 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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