Correlation Between Cincinnati Financial and Moonpig Group
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Moonpig Group 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 Cincinnati Financial and Moonpig Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial Corp and Moonpig Group PLC, you can compare the effects of market volatilities on Cincinnati Financial and Moonpig Group 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 Cincinnati Financial with a short position of Moonpig Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Moonpig Group.
Diversification Opportunities for Cincinnati Financial and Moonpig Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cincinnati and Moonpig is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Moonpig Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonpig Group PLC and Cincinnati Financial 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 Cincinnati Financial Corp are associated (or correlated) with Moonpig Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonpig Group PLC has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Moonpig Group go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Moonpig Group
Assuming the 90 days trading horizon Cincinnati Financial Corp is expected to generate 0.55 times more return on investment than Moonpig Group. However, Cincinnati Financial Corp is 1.81 times less risky than Moonpig Group. It trades about 0.12 of its potential returns per unit of risk. Moonpig Group PLC is currently generating about 0.06 per unit of risk. If you would invest 13,628 in Cincinnati Financial Corp on September 14, 2024 and sell it today you would earn a total of 1,584 from holding Cincinnati Financial Corp or generate 11.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cincinnati Financial Corp vs. Moonpig Group PLC
Performance |
Timeline |
Cincinnati Financial Corp |
Moonpig Group PLC |
Cincinnati Financial and Moonpig Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cincinnati Financial and Moonpig Group
The main advantage of trading using opposite Cincinnati Financial and Moonpig Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Moonpig Group 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 Moonpig Group will offset losses from the drop in Moonpig Group's long position.Cincinnati Financial vs. Systemair AB | Cincinnati Financial vs. Vitec Software Group | Cincinnati Financial vs. Foresight Environmental Infrastructure | Cincinnati Financial vs. Tata Steel Limited |
Moonpig Group vs. Prudential Financial | Moonpig Group vs. National Bank of | Moonpig Group vs. St Galler Kantonalbank | Moonpig Group vs. Cincinnati Financial Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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