Correlation Between Semtech and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Cincinnati Financial, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Cincinnati Financial.
Diversification Opportunities for Semtech and Cincinnati Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Semtech and Cincinnati is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Semtech 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 Semtech 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 Semtech i.e., Semtech and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Semtech and Cincinnati Financial
Given the investment horizon of 90 days Semtech is expected to under-perform the Cincinnati Financial. In addition to that, Semtech is 5.42 times more volatile than Cincinnati Financial. It trades about -0.21 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about -0.01 per unit of volatility. If you would invest 14,089 in Cincinnati Financial on November 28, 2024 and sell it today you would lose (95.00) from holding Cincinnati Financial or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Cincinnati Financial
Performance |
| Timeline |
| Semtech |
| Cincinnati Financial |
Semtech and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Cincinnati Financial
The main advantage of trading using opposite Semtech and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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