Correlation Between Ep Emerging and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Ep Emerging 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 Ep Emerging and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ep Emerging Markets and Cincinnati Financial, you can compare the effects of market volatilities on Ep Emerging 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 Ep Emerging with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Cincinnati Financial.
Diversification Opportunities for Ep Emerging and Cincinnati Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EPASX and Cincinnati is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Ep Emerging 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 Ep Emerging Markets 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 has no effect on the direction of Ep Emerging i.e., Ep Emerging and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Ep Emerging and Cincinnati Financial
Assuming the 90 days horizon Ep Emerging Markets is expected to under-perform the Cincinnati Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ep Emerging Markets is 1.53 times less risky than Cincinnati Financial. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Cincinnati Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,118 in Cincinnati Financial on September 13, 2024 and sell it today you would earn a total of 91.00 from holding Cincinnati Financial or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ep Emerging Markets vs. Cincinnati Financial
Performance |
| Timeline |
| Ep Emerging Markets |
| Cincinnati Financial |
Ep Emerging and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ep Emerging and Cincinnati Financial
The main advantage of trading using opposite Ep Emerging and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging 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.| Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Investment Managers Series |
| Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley | Cincinnati Financial vs. The Allstate | Cincinnati Financial vs. Markel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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