Correlation Between Cornish Metals and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and Cincinnati Financial 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 Cornish Metals and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Cincinnati Financial Corp, you can compare the effects of market volatilities on Cornish Metals and Cincinnati Financial 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 Cornish Metals with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Cincinnati Financial.
Diversification Opportunities for Cornish Metals and Cincinnati Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cornish and Cincinnati is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and Cornish Metals 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 Cornish Metals are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of Cornish Metals i.e., Cornish Metals and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Cornish Metals and Cincinnati Financial
Assuming the 90 days trading horizon Cornish Metals is expected to generate 3.33 times more return on investment than Cincinnati Financial. However, Cornish Metals is 3.33 times more volatile than Cincinnati Financial Corp. It trades about 0.05 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about -0.03 per unit of risk. If you would invest 790.00 in Cornish Metals on September 12, 2024 and sell it today you would earn a total of 25.00 from holding Cornish Metals or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Cincinnati Financial Corp
Performance |
| Timeline |
| Cornish Metals |
| Cincinnati Financial Corp |
Cornish Metals and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Cincinnati Financial
The main advantage of trading using opposite Cornish Metals and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Ferrexpo PLC | Cornish Metals vs. Atalaya Mining |
| Cincinnati Financial vs. Hong Kong Land | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Coor Service Management | Cincinnati Financial vs. Fidelity Sustainable USD |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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