Correlation Between Cincinnati Financial and URU Metals
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and URU Metals 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 URU Metals 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 URU Metals, you can compare the effects of market volatilities on Cincinnati Financial and URU Metals 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and URU Metals.
Diversification Opportunities for Cincinnati Financial and URU Metals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cincinnati and URU is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and URU Metals go up and down completely randomly.
Pair Corralation between Cincinnati Financial and URU Metals
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to under-perform the URU Metals. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial Corp is 3.88 times less risky than URU Metals. The stock trades about -0.06 of its potential returns per unit of risk. The URU Metals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,500 in URU Metals on September 20, 2024 and sell it today you would earn a total of 2,500 from holding URU Metals or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. URU Metals
Performance |
| Timeline |
| Cincinnati Financial Corp |
| URU Metals |
Cincinnati Financial and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and URU Metals
The main advantage of trading using opposite Cincinnati Financial and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.| Cincinnati Financial vs. Samsung Electronics Co | Cincinnati Financial vs. Samsung Electronics Co | Cincinnati Financial vs. Hyundai Motor | Cincinnati Financial vs. Reliance Industries Ltd |
| URU Metals vs. OneSavings Bank PLC | URU Metals vs. MT Bank Corp | URU Metals vs. Cincinnati Financial Corp | URU Metals vs. Sabre Insurance Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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