Correlation Between DELTA AIR and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both DELTA AIR 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 DELTA AIR and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DELTA AIR LINES and Cincinnati Financial Corp, you can compare the effects of market volatilities on DELTA AIR 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 DELTA AIR with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and Cincinnati Financial.
Diversification Opportunities for DELTA AIR and Cincinnati Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DELTA and Cincinnati is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES 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 DELTA AIR 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 DELTA AIR LINES 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 DELTA AIR i.e., DELTA AIR and Cincinnati Financial go up and down completely randomly.
Pair Corralation between DELTA AIR and Cincinnati Financial
Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 1.69 times more return on investment than Cincinnati Financial. However, DELTA AIR is 1.69 times more volatile than Cincinnati Financial Corp. It trades about 0.2 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.09 per unit of risk. If you would invest 5,850 in DELTA AIR LINES on October 30, 2024 and sell it today you would earn a total of 567.00 from holding DELTA AIR LINES or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DELTA AIR LINES vs. Cincinnati Financial Corp
Performance |
| Timeline |
| DELTA AIR LINES |
| Cincinnati Financial Corp |
DELTA AIR and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DELTA AIR and Cincinnati Financial
The main advantage of trading using opposite DELTA AIR and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR 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.| DELTA AIR vs. Lery Seafood Group | DELTA AIR vs. SENECA FOODS A | DELTA AIR vs. UNITED RENTALS | DELTA AIR vs. FUYO GENERAL LEASE |
| Cincinnati Financial vs. De Grey Mining | Cincinnati Financial vs. Canon Marketing Japan | Cincinnati Financial vs. MAGNUM MINING EXP | Cincinnati Financial vs. MAG SILVER |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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