Correlation Between RCS MediaGroup and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup 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 RCS MediaGroup and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Cincinnati Financial, you can compare the effects of market volatilities on RCS MediaGroup 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 RCS MediaGroup with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Cincinnati Financial.
Diversification Opportunities for RCS MediaGroup and Cincinnati Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RCS and Cincinnati is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and Cincinnati Financial go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Cincinnati Financial
Assuming the 90 days horizon RCS MediaGroup is expected to generate 1.51 times less return on investment than Cincinnati Financial. In addition to that, RCS MediaGroup is 1.48 times more volatile than Cincinnati Financial. It trades about 0.07 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.15 per unit of volatility. If you would invest 9,986 in Cincinnati Financial on September 2, 2024 and sell it today you would earn a total of 5,997 from holding Cincinnati Financial or generate 60.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.13% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. Cincinnati Financial
Performance |
| Timeline |
| RCS MediaGroup SpA |
| Cincinnati Financial |
RCS MediaGroup and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and Cincinnati Financial
The main advantage of trading using opposite RCS MediaGroup and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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.| RCS MediaGroup vs. Slate Office REIT | RCS MediaGroup vs. HUMANA INC | RCS MediaGroup vs. Aquagold International | RCS MediaGroup vs. Barloworld Ltd ADR |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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