Correlation Between Cincinnati Financial and Centaur Media
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Cincinnati Financial and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Centaur Media.
Diversification Opportunities for Cincinnati Financial and Centaur Media
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cincinnati and Centaur is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Centaur Media go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Centaur Media
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.86 times more return on investment than Centaur Media. However, Cincinnati Financial Corp is 1.16 times less risky than Centaur Media. It trades about 0.06 of its potential returns per unit of risk. Centaur Media is currently generating about -0.04 per unit of risk. If you would invest 10,333 in Cincinnati Financial Corp on August 31, 2024 and sell it today you would earn a total of 5,750 from holding Cincinnati Financial Corp or generate 55.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.72% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Centaur Media
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Centaur Media |
Cincinnati Financial and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Centaur Media
The main advantage of trading using opposite Cincinnati Financial and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Coor Service Management | Cincinnati Financial vs. Aeorema Communications Plc | Cincinnati Financial vs. JLEN Environmental Assets |
| Centaur Media vs. Cornish Metals | Centaur Media vs. Silvercorp Metals | Centaur Media vs. HCA Healthcare | Centaur Media vs. Target Healthcare REIT |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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