Correlation Between G5 Entertainment and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment 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 G5 Entertainment and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and Cincinnati Financial Corp, you can compare the effects of market volatilities on G5 Entertainment 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 G5 Entertainment with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Cincinnati Financial.
Diversification Opportunities for G5 Entertainment and Cincinnati Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0QUS and Cincinnati is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB 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 G5 Entertainment 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 G5 Entertainment AB 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 G5 Entertainment i.e., G5 Entertainment and Cincinnati Financial go up and down completely randomly.
Pair Corralation between G5 Entertainment and Cincinnati Financial
Assuming the 90 days trading horizon G5 Entertainment AB is expected to under-perform the Cincinnati Financial. In addition to that, G5 Entertainment is 1.21 times more volatile than Cincinnati Financial Corp. It trades about -0.04 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.06 per unit of volatility. 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 Together |
| Strength | Significant |
| Accuracy | 93.11% |
| Values | Daily Returns |
G5 Entertainment AB vs. Cincinnati Financial Corp
Performance |
| Timeline |
| G5 Entertainment |
| Cincinnati Financial Corp |
G5 Entertainment and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Cincinnati Financial
The main advantage of trading using opposite G5 Entertainment and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment 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.| G5 Entertainment vs. Neometals | G5 Entertainment vs. Coor Service Management | G5 Entertainment vs. Aeorema Communications Plc | G5 Entertainment vs. JLEN Environmental Assets |
| Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Coor Service Management | Cincinnati Financial vs. Aeorema Communications Plc | Cincinnati Financial vs. JLEN Environmental Assets |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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