Correlation Between Hyundai and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Hyundai 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 Hyundai and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Cincinnati Financial Corp, you can compare the effects of market volatilities on Hyundai 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 Hyundai with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Cincinnati Financial.
Diversification Opportunities for Hyundai and Cincinnati Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Cincinnati is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp and Hyundai 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 Hyundai Motor 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 Corp has no effect on the direction of Hyundai i.e., Hyundai and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Hyundai and Cincinnati Financial
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Cincinnati Financial. In addition to that, Hyundai is 1.52 times more volatile than Cincinnati Financial Corp. It trades about -0.08 of its total potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.15 per unit of volatility. If you would invest 13,425 in Cincinnati Financial Corp on September 6, 2024 and sell it today you would earn a total of 2,164 from holding Cincinnati Financial Corp or generate 16.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hyundai Motor vs. Cincinnati Financial Corp
Performance |
Timeline |
Hyundai Motor |
Cincinnati Financial Corp |
Hyundai and Cincinnati Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai and Cincinnati Financial
The main advantage of trading using opposite Hyundai and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai 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.Hyundai vs. Lowland Investment Co | Hyundai vs. The Investment | Hyundai vs. Livermore Investments Group | Hyundai vs. Taylor Maritime Investments |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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