Correlation Between Fevertree Drinks and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Cincinnati Financial Corp, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Cincinnati Financial.
Diversification Opportunities for Fevertree Drinks and Cincinnati Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fevertree and Cincinnati is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc 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 Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Cincinnati Financial
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 1.1 times more return on investment than Cincinnati Financial. However, Fevertree Drinks is 1.1 times more volatile than Cincinnati Financial Corp. It trades about -0.05 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.13 per unit of risk. If you would invest 67,100 in Fevertree Drinks Plc on October 25, 2024 and sell it today you would lose (1,350) from holding Fevertree Drinks Plc or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Cincinnati Financial Corp |
Fevertree Drinks and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Cincinnati Financial
The main advantage of trading using opposite Fevertree Drinks and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Tungsten West PLC | Fevertree Drinks vs. Argo Group Limited | Fevertree Drinks vs. Hardide PLC | Fevertree Drinks vs. Gfinity PLC |
| Cincinnati Financial vs. Erste Group Bank | Cincinnati Financial vs. Check Point Software | Cincinnati Financial vs. Software Circle plc | Cincinnati Financial vs. Vitec Software Group |
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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