Correlation Between Direct Line and Osisko Metals
Can any of the company-specific risk be diversified away by investing in both Direct Line and Osisko Metals 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 Direct Line and Osisko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Line Insurance and Osisko Metals, you can compare the effects of market volatilities on Direct Line and Osisko Metals 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 Direct Line with a short position of Osisko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Osisko Metals.
Diversification Opportunities for Direct Line and Osisko Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direct and Osisko is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Osisko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Metals and Direct Line 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 Direct Line Insurance are associated (or correlated) with Osisko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Metals has no effect on the direction of Direct Line i.e., Direct Line and Osisko Metals go up and down completely randomly.
Pair Corralation between Direct Line and Osisko Metals
Assuming the 90 days trading horizon Direct Line is expected to generate 1.29 times less return on investment than Osisko Metals. But when comparing it to its historical volatility, Direct Line Insurance is 1.57 times less risky than Osisko Metals. It trades about 0.04 of its potential returns per unit of risk. Osisko Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Osisko Metals on November 5, 2024 and sell it today you would earn a total of 5.00 from holding Osisko Metals or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. Osisko Metals
Performance |
| Timeline |
| Direct Line Insurance |
| Osisko Metals |
Direct Line and Osisko Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Osisko Metals
The main advantage of trading using opposite Direct Line and Osisko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Osisko Metals 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 Osisko Metals will offset losses from the drop in Osisko Metals' long position.| Direct Line vs. SK TELECOM TDADR | Direct Line vs. Global Ship Lease | Direct Line vs. TELECOM ITALIA | Direct Line vs. Telecom Argentina SA |
| Osisko Metals vs. New Residential Investment | Osisko Metals vs. Scottish Mortgage Investment | Osisko Metals vs. PennantPark Investment | Osisko Metals vs. Nippon Light Metal |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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