Correlation Between Cincinnati Financial and 615369AX3

Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and 615369AX3 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 615369AX3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cincinnati Financial and MCO 31 29 NOV 61, you can compare the effects of market volatilities on Cincinnati Financial and 615369AX3 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 615369AX3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and 615369AX3.

Diversification Opportunities for Cincinnati Financial and 615369AX3

-0.64

Correlation Coefficient

Cincinnati Financial  615369AX3

Excellent diversification

The 3 months correlation between Cincinnati and 615369AX3 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and MCO 31 29 NOV 61 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO 31 29 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 615369AX3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCO 31 29 has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and 615369AX3 go up and down completely randomly.

Pair Corralation between Cincinnati Financial and 615369AX3

Given the investment horizon of 90 days Cincinnati Financial is expected to generate 1.21 times more return on investment than 615369AX3. However, Cincinnati Financial is 1.21 times more volatile than MCO 31 29 NOV 61. It trades about 0.12 of its potential returns per unit of risk. MCO 31 29 NOV 61 is currently generating about -0.09 per unit of risk. If you would invest  13,637  in Cincinnati Financial on September 14, 2024 and sell it today you would earn a total of  1,585  from holding Cincinnati Financial or generate 11.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.63%
Values	Daily Returns

Cincinnati Financial  vs.  MCO 31 29 NOV 61

Cincinnati Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MCO 31 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCO 31 29 NOV 61 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MCO 31 29 NOV 61 investors.

Pair Trading with Cincinnati Financial and 615369AX3

The main advantage of trading using opposite Cincinnati Financial and 615369AX3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, 615369AX3 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 615369AX3 will offset losses from the drop in 615369AX3's long position.

The idea behind Cincinnati Financial and MCO 31 29 NOV 61 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.