Correlation Between Xtrackers ShortDAX and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Cincinnati Financial 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 Xtrackers ShortDAX and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Cincinnati Financial Corp, you can compare the effects of market volatilities on Xtrackers ShortDAX and Cincinnati Financial 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 Xtrackers ShortDAX with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Cincinnati Financial.
Diversification Opportunities for Xtrackers ShortDAX and Cincinnati Financial
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Cincinnati is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and Xtrackers ShortDAX 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 Xtrackers ShortDAX are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Cincinnati Financial
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Cincinnati Financial. In addition to that, Xtrackers ShortDAX is 1.13 times more volatile than Cincinnati Financial Corp. It trades about -0.05 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.07 per unit of volatility. If you would invest 8,809 in Cincinnati Financial Corp on October 11, 2024 and sell it today you would earn a total of 4,896 from holding Cincinnati Financial Corp or generate 55.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Cincinnati Financial Corp |
Xtrackers ShortDAX and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Cincinnati Financial
The main advantage of trading using opposite Xtrackers ShortDAX and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| Cincinnati Financial vs. COMPUTERSHARE | Cincinnati Financial vs. Rocket Internet SE | Cincinnati Financial vs. Entravision Communications | Cincinnati Financial vs. Grand Canyon Education |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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