Correlation Between Cincinnati Financial and SECURITAS

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

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

Diversification Opportunities for Cincinnati Financial and SECURITAS

0.01

Correlation Coefficient

Cincinnati Financial  SECURITAS

Significant diversification

The 3 months correlation between Cincinnati and SECURITAS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and SECURITAS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURITAS B 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 Corp are associated (or correlated) with SECURITAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURITAS B has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and SECURITAS go up and down completely randomly.

Pair Corralation between Cincinnati Financial and SECURITAS

Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.57 times more return on investment than SECURITAS. However, Cincinnati Financial Corp is 1.76 times less risky than SECURITAS. It trades about 0.1 of its potential returns per unit of risk. SECURITAS B is currently generating about 0.0 per unit of risk. If you would invest  11,815  in Cincinnati Financial Corp on April 24, 2025 and sell it today you would earn a total of  995.00  from holding Cincinnati Financial Corp or generate 8.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Cincinnati Financial Corp  vs.  SECURITAS B

Cincinnati Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SECURITAS B

Risk-Adjusted Performance

Very Weak

Over the last 90 days SECURITAS B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SECURITAS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cincinnati Financial and SECURITAS

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

The idea behind Cincinnati Financial Corp and SECURITAS B 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.