Correlation Between GoldMining and Direct Line
Can any of the company-specific risk be diversified away by investing in both GoldMining and Direct Line 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 GoldMining and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Direct Line Insurance, you can compare the effects of market volatilities on GoldMining and Direct Line 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 GoldMining with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Direct Line.
Diversification Opportunities for GoldMining and Direct Line
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GoldMining and Direct is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and GoldMining 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 GoldMining are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of GoldMining i.e., GoldMining and Direct Line go up and down completely randomly.
Pair Corralation between GoldMining and Direct Line
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Direct Line. In addition to that, GoldMining is 2.05 times more volatile than Direct Line Insurance. It trades about -0.16 of its total potential returns per unit of risk. Direct Line Insurance is currently generating about -0.13 per unit of volatility. If you would invest 16,620 in Direct Line Insurance on August 30, 2024 and sell it today you would lose (750.00) from holding Direct Line Insurance or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
GoldMining vs. Direct Line Insurance
Performance |
| Timeline |
| GoldMining |
| Direct Line Insurance |
GoldMining and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Direct Line
The main advantage of trading using opposite GoldMining and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel Group |
| Direct Line vs. Toyota Motor Corp | Direct Line vs. SoftBank Group Corp | Direct Line vs. OTP Bank Nyrt | Direct Line vs. Las Vegas Sands |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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