Correlation Between Sapiens International and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Sapiens International 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 Sapiens International and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and Cincinnati Financial, you can compare the effects of market volatilities on Sapiens International 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 Sapiens International with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and Cincinnati Financial.
Diversification Opportunities for Sapiens International and Cincinnati Financial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sapiens and Cincinnati is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Sapiens International 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 Sapiens International 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 Sapiens International i.e., Sapiens International and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Sapiens International and Cincinnati Financial
Given the investment horizon of 90 days Sapiens International is expected to generate 1.25 times less return on investment than Cincinnati Financial. In addition to that, Sapiens International is 1.46 times more volatile than Cincinnati Financial. It trades about 0.03 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.06 per unit of volatility. If you would invest 10,980 in Cincinnati Financial on August 27, 2024 and sell it today you would earn a total of 4,962 from holding Cincinnati Financial or generate 45.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapiens International vs. Cincinnati Financial
Performance |
| Timeline |
| Sapiens International |
| Cincinnati Financial |
Sapiens International and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapiens International and Cincinnati Financial
The main advantage of trading using opposite Sapiens International and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International 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.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |