Correlation Between Cincinnati Financial and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Treasury Wine Estates, you can compare the effects of market volatilities on Cincinnati Financial and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Treasury Wine.
Diversification Opportunities for Cincinnati Financial and Treasury Wine
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cincinnati and Treasury is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Treasury Wine go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Treasury Wine
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.78 times more return on investment than Treasury Wine. However, Cincinnati Financial is 1.28 times less risky than Treasury Wine. It trades about 0.43 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.22 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Treasury Wine Estates
Performance |
| Timeline |
| Cincinnati Financial |
| Treasury Wine Estates |
Cincinnati Financial and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Treasury Wine
The main advantage of trading using opposite Cincinnati Financial and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Treasury Wine vs. Diageo plc | Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Constellation Brands Class | Treasury Wine vs. Brown Forman |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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