Correlation Between Direct Line and JLF INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Direct Line and JLF INVESTMENT 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 JLF INVESTMENT 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 JLF INVESTMENT, you can compare the effects of market volatilities on Direct Line and JLF INVESTMENT 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 JLF INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and JLF INVESTMENT.
Diversification Opportunities for Direct Line and JLF INVESTMENT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direct and JLF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and JLF INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLF INVESTMENT 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 JLF INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLF INVESTMENT has no effect on the direction of Direct Line i.e., Direct Line and JLF INVESTMENT go up and down completely randomly.
Pair Corralation between Direct Line and JLF INVESTMENT
If you would invest 307.00 in Direct Line Insurance on November 3, 2024 and sell it today you would earn a total of 10.00 from holding Direct Line Insurance or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direct Line Insurance vs. JLF INVESTMENT
Performance |
| Timeline |
| Direct Line Insurance |
| JLF INVESTMENT |
Direct Line and JLF INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and JLF INVESTMENT
The main advantage of trading using opposite Direct Line and JLF INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, JLF INVESTMENT 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 JLF INVESTMENT will offset losses from the drop in JLF INVESTMENT's long position.| Direct Line vs. INSURANCE AUST GRP | Direct Line vs. CHRYSALIS INVESTMENTS LTD | Direct Line vs. HK Electric Investments | Direct Line vs. New China Life |
| JLF INVESTMENT vs. Apple Inc | JLF INVESTMENT vs. Apple Inc | JLF INVESTMENT vs. Apple Inc | JLF INVESTMENT vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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