Correlation Between Mutual Of and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Mutual Of 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 Mutual Of and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Cincinnati Financial, you can compare the effects of market volatilities on Mutual Of 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 Mutual Of with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Cincinnati Financial.
Diversification Opportunities for Mutual Of and Cincinnati Financial
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mutual and Cincinnati is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Mutual Of 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 Mutual Of America 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 Mutual Of i.e., Mutual Of and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Mutual Of and Cincinnati Financial
Assuming the 90 days horizon Mutual Of is expected to generate 6.38 times less return on investment than Cincinnati Financial. But when comparing it to its historical volatility, Mutual Of America is 3.95 times less risky than Cincinnati Financial. It trades about 0.13 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14,449 in Cincinnati Financial on August 27, 2024 and sell it today you would earn a total of 1,198 from holding Cincinnati Financial or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. Cincinnati Financial
Performance |
| Timeline |
| Mutual Of America |
| Cincinnati Financial |
Mutual Of and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Cincinnati Financial
The main advantage of trading using opposite Mutual Of and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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.| Mutual Of vs. Victory High Income | Mutual Of vs. Vanguard Global Credit | Mutual Of vs. Ms Global Fixed | Mutual Of vs. Kinetics Spin Off And |
| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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