Correlation Between Cincinnati Financial and Spring Valley
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Spring Valley 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 Spring Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Spring Valley Acquisition, you can compare the effects of market volatilities on Cincinnati Financial and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Spring Valley.
Diversification Opportunities for Cincinnati Financial and Spring Valley
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cincinnati and Spring is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Spring Valley go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Spring Valley
Given the investment horizon of 90 days Cincinnati Financial is expected to under-perform the Spring Valley. But the stock apears to be less risky and, when comparing its historical volatility, Cincinnati Financial is 6.29 times less risky than Spring Valley. The stock trades about -0.08 of its potential returns per unit of risk. The Spring Valley Acquisition is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7.03 in Spring Valley Acquisition on October 23, 2024 and sell it today you would earn a total of 1.97 from holding Spring Valley Acquisition or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.16% |
| Values | Daily Returns |
Cincinnati Financial vs. Spring Valley Acquisition
Performance |
| Timeline |
| Cincinnati Financial |
| Spring Valley Acquisition |
Cincinnati Financial and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Spring Valley
The main advantage of trading using opposite Cincinnati Financial and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Spring Valley vs. Old Republic International | Spring Valley vs. AG Mortgage Investment | Spring Valley vs. Cincinnati Financial | Spring Valley vs. United Fire 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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