Correlation Between Exxon and CINCINNATI
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By analyzing existing cross correlation between Exxon Mobil Corp and CINCINNATI FINL P, you can compare the effects of market volatilities on Exxon and CINCINNATI 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 Exxon with a short position of CINCINNATI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and CINCINNATI.
Diversification Opportunities for Exxon and CINCINNATI
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and CINCINNATI is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and CINCINNATI FINL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CINCINNATI FINL P and Exxon 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 Exxon Mobil Corp are associated (or correlated) with CINCINNATI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CINCINNATI FINL P has no effect on the direction of Exxon i.e., Exxon and CINCINNATI go up and down completely randomly.
Pair Corralation between Exxon and CINCINNATI
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.58 times more return on investment than CINCINNATI. However, Exxon is 1.58 times more volatile than CINCINNATI FINL P. It trades about 0.15 of its potential returns per unit of risk. CINCINNATI FINL P is currently generating about 0.23 per unit of risk. If you would invest 11,401 in Exxon Mobil Corp on September 2, 2024 and sell it today you would earn a total of 395.00 from holding Exxon Mobil Corp or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Exxon Mobil Corp vs. CINCINNATI FINL P
Performance |
| Timeline |
| Exxon Mobil Corp |
| CINCINNATI FINL P |
Exxon and CINCINNATI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and CINCINNATI
The main advantage of trading using opposite Exxon and CINCINNATI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, CINCINNATI 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 will offset losses from the drop in CINCINNATI's long position.The idea behind Exxon Mobil Corp and CINCINNATI FINL P 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 vs. Tootsie Roll Industries | CINCINNATI vs. BBB Foods | CINCINNATI vs. AMCON Distributing | CINCINNATI vs. Rave Restaurant 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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