Correlation Between Where Food and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Where Food 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 Where Food and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Where Food Comes and Cincinnati Financial, you can compare the effects of market volatilities on Where Food 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 Where Food with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and Cincinnati Financial.
Diversification Opportunities for Where Food and Cincinnati Financial
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Where and Cincinnati is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Where Food 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 Where Food Comes 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 Where Food i.e., Where Food and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Where Food and Cincinnati Financial
Given the investment horizon of 90 days Where Food Comes is expected to under-perform the Cincinnati Financial. But the stock apears to be less risky and, when comparing its historical volatility, Where Food Comes is 1.08 times less risky than Cincinnati Financial. The stock trades about -0.16 of its potential returns per unit of risk. The Cincinnati Financial is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 14,066 in Cincinnati Financial on November 18, 2024 and sell it today you would lose (369.00) from holding Cincinnati Financial or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Where Food Comes vs. Cincinnati Financial
Performance |
| Timeline |
| Where Food Comes |
| Cincinnati Financial |
Where Food and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Where Food and Cincinnati Financial
The main advantage of trading using opposite Where Food and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Where Food 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.The idea behind Where Food Comes and Cincinnati Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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