Correlation Between Cincinnati Financial and Markel
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Markel 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 Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Markel, you can compare the effects of market volatilities on Cincinnati Financial and Markel 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 Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Markel.
Diversification Opportunities for Cincinnati Financial and Markel
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cincinnati and Markel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Markel go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Markel
Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.94 times more return on investment than Markel. However, Cincinnati Financial is 1.07 times less risky than Markel. It trades about 0.12 of its potential returns per unit of risk. Markel is currently generating about 0.05 per unit of risk. If you would invest 10,153 in Cincinnati Financial on August 29, 2024 and sell it today you would earn a total of 5,863 from holding Cincinnati Financial or generate 57.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Markel
Performance |
| Timeline |
| Cincinnati Financial |
| Markel |
Cincinnati Financial and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Markel
The main advantage of trading using opposite Cincinnati Financial and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Markel 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 Markel will offset losses from the drop in Markel's long position.| Cincinnati Financial vs. Argo Group International | Cincinnati Financial vs. Donegal Group A | Cincinnati Financial vs. Selective Insurance Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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