Correlation Between Cincinnati Financial and MTY Food
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and MTY Food 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 MTY Food 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 MTY Food Group, you can compare the effects of market volatilities on Cincinnati Financial and MTY Food 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 MTY Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and MTY Food.
Diversification Opportunities for Cincinnati Financial and MTY Food
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and MTY is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and MTY Food go up and down completely randomly.
Pair Corralation between Cincinnati Financial and MTY Food
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.83 times more return on investment than MTY Food. However, Cincinnati Financial Corp is 1.21 times less risky than MTY Food. It trades about -0.13 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.15 per unit of risk. If you would invest 14,103 in Cincinnati Financial Corp on October 11, 2024 and sell it today you would lose (398.00) from holding Cincinnati Financial Corp or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. MTY Food Group
Performance |
| Timeline |
| Cincinnati Financial Corp |
| MTY Food Group |
Cincinnati Financial and MTY Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and MTY Food
The main advantage of trading using opposite Cincinnati Financial and MTY Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, MTY Food 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 MTY Food will offset losses from the drop in MTY Food's long position.| Cincinnati Financial vs. COMPUTERSHARE | Cincinnati Financial vs. Rocket Internet SE | Cincinnati Financial vs. Entravision Communications | Cincinnati Financial vs. Grand Canyon Education |
| MTY Food vs. UNIQA INSURANCE GR | MTY Food vs. Cincinnati Financial Corp | MTY Food vs. ORMAT TECHNOLOGIES | MTY Food vs. SOFI TECHNOLOGIES |
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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