Correlation Between Aeye and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Cincinnati Financial, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Cincinnati Financial.
Diversification Opportunities for Aeye and Cincinnati Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeye and Cincinnati is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Aeye 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 Aeye Inc 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 has no effect on the direction of Aeye i.e., Aeye and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Aeye and Cincinnati Financial
Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Cincinnati Financial. In addition to that, Aeye is 5.31 times more volatile than Cincinnati Financial. It trades about -0.01 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.03 per unit of volatility. If you would invest 15,118 in Cincinnati Financial on September 13, 2024 and sell it today you would earn a total of 91.00 from holding Cincinnati Financial or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aeye Inc vs. Cincinnati Financial
Performance |
| Timeline |
| Aeye Inc |
| Cincinnati Financial |
Aeye and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Cincinnati Financial
The main advantage of trading using opposite Aeye and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Aeva Technologies | Aeye vs. Quantumscape Corp |
| Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley | Cincinnati Financial vs. The Allstate | Cincinnati Financial vs. Markel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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