Correlation Between Cincinnati Financial and 49446RAZ2

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Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and 49446RAZ2 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 49446RAZ2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and KIM 32 01 APR 32, you can compare the effects of market volatilities on Cincinnati Financial and 49446RAZ2 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 49446RAZ2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and 49446RAZ2.

Diversification Opportunities for Cincinnati Financial and 49446RAZ2

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cincinnati and 49446RAZ2 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and KIM 32 01 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM 32 01 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 49446RAZ2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM 32 01 has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and 49446RAZ2 go up and down completely randomly.

Pair Corralation between Cincinnati Financial and 49446RAZ2

Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.76 times more return on investment than 49446RAZ2. However, Cincinnati Financial is 1.32 times less risky than 49446RAZ2. It trades about 0.02 of its potential returns per unit of risk. KIM 32 01 APR 32 is currently generating about -0.16 per unit of risk. If you would invest  15,118  in Cincinnati Financial on September 13, 2024 and sell it today you would earn a total of  50.00  from holding Cincinnati Financial or generate 0.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy66.67%
ValuesDaily Returns

Cincinnati Financial  vs.  KIM 32 01 APR 32

 Performance 
       Timeline  
Cincinnati Financial 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.
KIM 32 01 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KIM 32 01 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KIM 32 01 APR 32 investors.

Cincinnati Financial and 49446RAZ2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cincinnati Financial and 49446RAZ2

The main advantage of trading using opposite Cincinnati Financial and 49446RAZ2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, 49446RAZ2 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 49446RAZ2 will offset losses from the drop in 49446RAZ2's long position.
The idea behind Cincinnati Financial and KIM 32 01 APR 32 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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