Correlation Between GM and CINCINNATI
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By analyzing existing cross correlation between General Motors and CINCINNATI FINL P, you can compare the effects of market volatilities on GM and CINCINNATI 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 GM with a short position of CINCINNATI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CINCINNATI.
Diversification Opportunities for GM and CINCINNATI
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and CINCINNATI is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CINCINNATI FINL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CINCINNATI FINL P and GM 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 General Motors are associated (or correlated) with CINCINNATI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CINCINNATI FINL P has no effect on the direction of GM i.e., GM and CINCINNATI go up and down completely randomly.
Pair Corralation between GM and CINCINNATI
Allowing for the 90-day total investment horizon General Motors is expected to generate 6.0 times more return on investment than CINCINNATI. However, GM is 6.0 times more volatile than CINCINNATI FINL P. It trades about 0.16 of its potential returns per unit of risk. CINCINNATI FINL P is currently generating about -0.22 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
General Motors vs. CINCINNATI FINL P
Performance |
| Timeline |
| General Motors |
| CINCINNATI FINL P |
GM and CINCINNATI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CINCINNATI
The main advantage of trading using opposite GM and CINCINNATI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CINCINNATI 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 will offset losses from the drop in CINCINNATI's long position.The idea behind General Motors and CINCINNATI FINL P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CINCINNATI vs. Freedom Internet Group | CINCINNATI vs. Solstad Offshore ASA | CINCINNATI vs. Weibo Corp | CINCINNATI vs. KNOT Offshore Partners |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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