Correlation Between Cincinnati Financial and Alleghany
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Alleghany 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 Alleghany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Alleghany, you can compare the effects of market volatilities on Cincinnati Financial and Alleghany 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 Alleghany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Alleghany.
Diversification Opportunities for Cincinnati Financial and Alleghany
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cincinnati and Alleghany is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Alleghany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleghany 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 Alleghany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleghany has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Alleghany go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Alleghany
If you would invest 84,800 in Alleghany on December 29, 2023 and sell it today you would lose (21.00) from holding Alleghany or give up 0.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 27.13% |
Values | Daily Returns |
Cincinnati Financial vs. Alleghany
Performance |
Timeline |
Cincinnati Financial |
Alleghany |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Cincinnati Financial and Alleghany Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cincinnati Financial and Alleghany
The main advantage of trading using opposite Cincinnati Financial and Alleghany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Alleghany 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 Alleghany will offset losses from the drop in Alleghany's long position.Cincinnati Financial vs. Loews Corp | Cincinnati Financial vs. NI Holdings | Cincinnati Financial vs. American Financial Group | Cincinnati Financial vs. Hartford Financial Services |
Alleghany vs. Asure Software | Alleghany vs. Beyond Inc | Alleghany vs. Western Digital | Alleghany vs. Getty Copper |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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