Correlation Between Cincinnati Financial and Siriuspoint

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Siriuspoint 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 Cincinnati Financial and Siriuspoint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Financial and Siriuspoint, you can compare the effects of market volatilities on Cincinnati Financial and Siriuspoint 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 Cincinnati Financial with a short position of Siriuspoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Siriuspoint.

Diversification Opportunities for Cincinnati Financial and Siriuspoint

0.71

Correlation Coefficient

Cincinnati Financial  Siriuspoint

Poor diversification

The 3 months correlation between Cincinnati and Siriuspoint is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint and Cincinnati Financial 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 Cincinnati Financial are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Siriuspoint go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Siriuspoint

Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.73 times more return on investment than Siriuspoint. However, Cincinnati Financial is 1.37 times less risky than Siriuspoint. It trades about 0.16 of its potential returns per unit of risk. Siriuspoint is currently generating about 0.07 per unit of risk. If you would invest  13,554  in Cincinnati Financial on September 5, 2024 and sell it today you would earn a total of  2,095  from holding Cincinnati Financial or generate 15.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cincinnati Financial  vs.  Siriuspoint

Cincinnati Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cincinnati Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Siriuspoint

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cincinnati Financial and Siriuspoint

The main advantage of trading using opposite Cincinnati Financial and Siriuspoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Siriuspoint 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 Siriuspoint will offset losses from the drop in Siriuspoint's long position.

The idea behind Cincinnati Financial and Siriuspoint 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.