Correlation Between AVITA Medical and Direct Line
Can any of the company-specific risk be diversified away by investing in both AVITA Medical 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 AVITA Medical and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Direct Line Insurance, you can compare the effects of market volatilities on AVITA Medical 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 AVITA Medical with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Direct Line.
Diversification Opportunities for AVITA Medical and Direct Line
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AVITA and Direct is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical 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 AVITA Medical 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 AVITA Medical 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 AVITA Medical i.e., AVITA Medical and Direct Line go up and down completely randomly.
Pair Corralation between AVITA Medical and Direct Line
Assuming the 90 days trading horizon AVITA Medical is expected to generate 5.87 times less return on investment than Direct Line. In addition to that, AVITA Medical is 1.3 times more volatile than Direct Line Insurance. It trades about 0.01 of its total potential returns per unit of risk. Direct Line Insurance is currently generating about 0.07 per unit of volatility. If you would invest 175.00 in Direct Line Insurance on September 12, 2024 and sell it today you would earn a total of 127.00 from holding Direct Line Insurance or generate 72.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Direct Line Insurance
Performance |
| Timeline |
| AVITA Medical |
| Direct Line Insurance |
AVITA Medical and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Direct Line
The main advantage of trading using opposite AVITA Medical and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical 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.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| Direct Line vs. Superior Plus Corp | Direct Line vs. SIVERS SEMICONDUCTORS AB | Direct Line vs. CHINA HUARONG ENERHD 50 | Direct Line vs. NORDIC HALIBUT AS |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Transaction History View history of all your transactions and understand their impact on performance |