Correlation Between Cincinnati Financial and Horizon Bancorp

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

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

Diversification Opportunities for Cincinnati Financial and Horizon Bancorp

0.0

Correlation Coefficient

Cincinnati Financial  Horizon Bancorp

Pay attention - limited upside

The 3 months correlation between Cincinnati and Horizon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Horizon Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Bancorp 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 Horizon Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Bancorp has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Horizon Bancorp go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Horizon Bancorp

If you would invest  9,621  in Cincinnati Financial on January 25, 2024 and sell it today you would earn a total of  2,381  from holding Cincinnati Financial or generate 24.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cincinnati Financial  vs.  Horizon Bancorp

Cincinnati Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 7 (%) 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 May 2024.

Horizon Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Horizon Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cincinnati Financial and Horizon Bancorp

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

The idea behind Cincinnati Financial and Horizon Bancorp 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.