Correlation Between NN Group and Direct Line
Can any of the company-specific risk be diversified away by investing in both NN Group 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 NN Group and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Group NV and Direct Line Insurance, you can compare the effects of market volatilities on NN Group 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 NN Group with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN Group and Direct Line.
Diversification Opportunities for NN Group and Direct Line
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2NN and Direct is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV 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 NN Group 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 NN Group NV 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 NN Group i.e., NN Group and Direct Line go up and down completely randomly.
Pair Corralation between NN Group and Direct Line
Assuming the 90 days horizon NN Group NV is expected to generate 1.29 times more return on investment than Direct Line. However, NN Group is 1.29 times more volatile than Direct Line Insurance. It trades about 0.36 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.21 per unit of risk. If you would invest 4,380 in NN Group NV on November 29, 2024 and sell it today you would earn a total of 467.00 from holding NN Group NV or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NN Group NV vs. Direct Line Insurance
Performance |
| Timeline |
| NN Group NV |
| Direct Line Insurance |
NN Group and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN Group and Direct Line
The main advantage of trading using opposite NN Group and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN Group 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.| NN Group vs. AAC TECHNOLOGHLDGADR | NN Group vs. CORNISH METALS INC | NN Group vs. GRIFFIN MINING LTD | NN Group vs. THORNEY TECHS LTD |
| Direct Line vs. T MOBILE US | Direct Line vs. EIDESVIK OFFSHORE NK | Direct Line vs. SIEM OFFSHORE NEW | Direct Line vs. SBM OFFSHORE |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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