Correlation Between AMG Advanced and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Cincinnati Financial 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 AMG Advanced and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMG Advanced Metallurgical and Cincinnati Financial Corp, you can compare the effects of market volatilities on AMG Advanced and Cincinnati Financial 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 AMG Advanced with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Cincinnati Financial.
Diversification Opportunities for AMG Advanced and Cincinnati Financial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AMG and Cincinnati is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of AMG Advanced i.e., AMG Advanced and Cincinnati Financial go up and down completely randomly.
Pair Corralation between AMG Advanced and Cincinnati Financial
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Cincinnati Financial. In addition to that, AMG Advanced is 1.9 times more volatile than Cincinnati Financial Corp. It trades about -0.07 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.03 per unit of volatility. If you would invest 15,144 in Cincinnati Financial Corp on September 12, 2024 and sell it today you would lose (120.00) from holding Cincinnati Financial Corp or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Cincinnati Financial Corp
Performance |
| Timeline |
| AMG Advanced Metallu |
| Cincinnati Financial Corp |
AMG Advanced and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Cincinnati Financial
The main advantage of trading using opposite AMG Advanced and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| AMG Advanced vs. Neometals | AMG Advanced vs. Bisichi Mining PLC | AMG Advanced vs. Playtech Plc | AMG Advanced vs. Metals Exploration Plc |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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