Correlation Between Markel and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Markel 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 Markel and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Markel and Cincinnati Financial, you can compare the effects of market volatilities on Markel 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 Markel with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Markel and Cincinnati Financial.
Diversification Opportunities for Markel and Cincinnati Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Markel and Cincinnati is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Markel and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Markel 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 Markel 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 Markel i.e., Markel and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Markel and Cincinnati Financial
Assuming the 90 days horizon Markel is expected to generate 0.91 times more return on investment than Cincinnati Financial. However, Markel is 1.1 times less risky than Cincinnati Financial. It trades about 0.48 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.39 per unit of risk. If you would invest 141,900 in Markel on September 3, 2024 and sell it today you would earn a total of 28,400 from holding Markel or generate 20.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Markel vs. Cincinnati Financial
Performance |
| Timeline |
| Markel |
| Cincinnati Financial |
Markel and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Markel and Cincinnati Financial
The main advantage of trading using opposite Markel and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Markel 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.| Markel vs. GRIFFIN MINING LTD | Markel vs. CPU SOFTWAREHOUSE | Markel vs. ATOSS SOFTWARE | Markel vs. Perseus Mining Limited |
| Cincinnati Financial vs. JJ SNACK FOODS | Cincinnati Financial vs. Taiwan Semiconductor Manufacturing | Cincinnati Financial vs. ELMOS SEMICONDUCTOR | Cincinnati Financial vs. MOLSON RS BEVERAGE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |