Correlation Between Cincinnati Financial and Trupanion
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Trupanion 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 Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Trupanion, you can compare the effects of market volatilities on Cincinnati Financial and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Trupanion.
Diversification Opportunities for Cincinnati Financial and Trupanion
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Trupanion is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Trupanion go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Trupanion
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.75 times more return on investment than Trupanion. However, Cincinnati Financial is 1.34 times less risky than Trupanion. It trades about 0.43 of its potential returns per unit of risk. Trupanion is currently generating about 0.15 per unit of risk. If you would invest 13,819 in Cincinnati Financial on September 3, 2024 and sell it today you would earn a total of 2,164 from holding Cincinnati Financial or generate 15.66% 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. Trupanion
Performance |
| Timeline |
| Cincinnati Financial |
| Trupanion |
Cincinnati Financial and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Trupanion
The main advantage of trading using opposite Cincinnati Financial and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |