Correlation Between Cincinnati Financial and MAG SILVER
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and MAG SILVER 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 MAG SILVER 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 MAG SILVER, you can compare the effects of market volatilities on Cincinnati Financial and MAG SILVER 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 MAG SILVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and MAG SILVER.
Diversification Opportunities for Cincinnati Financial and MAG SILVER
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cincinnati and MAG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and MAG SILVER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG SILVER 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 MAG SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG SILVER has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and MAG SILVER go up and down completely randomly.
Pair Corralation between Cincinnati Financial and MAG SILVER
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.56 times more return on investment than MAG SILVER. However, Cincinnati Financial Corp is 1.8 times less risky than MAG SILVER. It trades about -0.13 of its potential returns per unit of risk. MAG SILVER is currently generating about -0.19 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. MAG SILVER
Performance |
| Timeline |
| Cincinnati Financial Corp |
| MAG SILVER |
Cincinnati Financial and MAG SILVER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and MAG SILVER
The main advantage of trading using opposite Cincinnati Financial and MAG SILVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, MAG SILVER 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 MAG SILVER will offset losses from the drop in MAG SILVER's long position.| Cincinnati Financial vs. COMPUTERSHARE | Cincinnati Financial vs. Rocket Internet SE | Cincinnati Financial vs. Entravision Communications | Cincinnati Financial vs. Grand Canyon Education |
| MAG SILVER vs. Cincinnati Financial Corp | MAG SILVER vs. The Hanover Insurance | MAG SILVER vs. SUN LIFE FINANCIAL | MAG SILVER vs. National Beverage Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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