Correlation Between Cincinnati Financial and Kinsale Capital
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Kinsale Capital 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 Kinsale Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Kinsale Capital Group, you can compare the effects of market volatilities on Cincinnati Financial and Kinsale Capital 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 Kinsale Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Kinsale Capital.
Diversification Opportunities for Cincinnati Financial and Kinsale Capital
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Kinsale is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital 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 are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Kinsale Capital go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Kinsale Capital
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.81 times more return on investment than Kinsale Capital. However, Cincinnati Financial is 1.24 times less risky than Kinsale Capital. It trades about -0.05 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about -0.19 per unit of risk. If you would invest 14,290 in Cincinnati Financial on October 23, 2024 and sell it today you would lose (224.00) from holding Cincinnati Financial or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Kinsale Capital Group
Performance |
| Timeline |
| Cincinnati Financial |
| Kinsale Capital Group |
Cincinnati Financial and Kinsale Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Kinsale Capital
The main advantage of trading using opposite Cincinnati Financial and Kinsale Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Kinsale Capital 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 Kinsale Capital will offset losses from the drop in Kinsale Capital's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Kinsale Capital vs. Selective Insurance Group | Kinsale Capital vs. Horace Mann Educators | Kinsale Capital vs. Kemper | Kinsale Capital vs. ProAssurance |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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