Correlation Between Cincinnati Financial and De Grey
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Cincinnati Financial and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and De Grey.
Diversification Opportunities for Cincinnati Financial and De Grey
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cincinnati and DGD is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and De Grey go up and down completely randomly.
Pair Corralation between Cincinnati Financial and De Grey
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.43 times more return on investment than De Grey. However, Cincinnati Financial Corp is 2.32 times less risky than De Grey. It trades about 0.07 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.02 per unit of risk. If you would invest 8,860 in Cincinnati Financial Corp on October 13, 2024 and sell it today you would earn a total of 4,865 from holding Cincinnati Financial Corp or generate 54.91% 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. De Grey Mining
Performance |
| Timeline |
| Cincinnati Financial Corp |
| De Grey Mining |
Cincinnati Financial and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and De Grey
The main advantage of trading using opposite Cincinnati Financial and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc | Cincinnati Financial vs. Apple Inc |
| De Grey vs. TRADEGATE | De Grey vs. Canon Marketing Japan | De Grey vs. Cincinnati Financial Corp | De Grey vs. JSC Halyk bank |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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