Correlation Between Nib Holdings and Direct Line
Can any of the company-specific risk be diversified away by investing in both Nib Holdings 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 Nib Holdings and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nib holdings limited and Direct Line Insurance, you can compare the effects of market volatilities on Nib Holdings 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 Nib Holdings with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nib Holdings and Direct Line.
Diversification Opportunities for Nib Holdings and Direct Line
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nib and Direct is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding nib holdings limited 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 Nib Holdings 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 nib holdings limited 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 Nib Holdings i.e., Nib Holdings and Direct Line go up and down completely randomly.
Pair Corralation between Nib Holdings and Direct Line
Assuming the 90 days horizon nib holdings limited is expected to generate 2.14 times more return on investment than Direct Line. However, Nib Holdings is 2.14 times more volatile than Direct Line Insurance. It trades about 0.15 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.18 per unit of risk. If you would invest 322.00 in nib holdings limited on November 3, 2024 and sell it today you would earn a total of 16.00 from holding nib holdings limited or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
nib holdings limited vs. Direct Line Insurance
Performance |
| Timeline |
| nib holdings limited |
| Direct Line Insurance |
Nib Holdings and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nib Holdings and Direct Line
The main advantage of trading using opposite Nib Holdings and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nib Holdings 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.| Nib Holdings vs. Osisko Metals | Nib Holdings vs. Japan Medical Dynamic | Nib Holdings vs. Advanced Medical Solutions | Nib Holdings vs. Inspire Medical Systems |
| Direct Line vs. NTG Nordic Transport | Direct Line vs. Fukuyama Transporting Co | Direct Line vs. Columbia Sportswear | Direct Line vs. SINGAPORE AIRLINES |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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