Correlation Between KVH Industries and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both KVH Industries 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 KVH Industries and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Cincinnati Financial, you can compare the effects of market volatilities on KVH Industries 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 KVH Industries with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Cincinnati Financial.
Diversification Opportunities for KVH Industries and Cincinnati Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KVH and Cincinnati is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Cincinnati Financial go up and down completely randomly.
Pair Corralation between KVH Industries and Cincinnati Financial
Given the investment horizon of 90 days KVH Industries is expected to under-perform the Cincinnati Financial. In addition to that, KVH Industries is 2.16 times more volatile than Cincinnati Financial. It trades about -0.04 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.09 per unit of volatility. If you would invest 10,121 in Cincinnati Financial on August 31, 2024 and sell it today you would earn a total of 5,895 from holding Cincinnati Financial or generate 58.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Cincinnati Financial
Performance |
| Timeline |
| KVH Industries |
| Cincinnati Financial |
KVH Industries and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Cincinnati Financial
The main advantage of trading using opposite KVH Industries and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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.| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. The Allstate | 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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