Correlation Between Direct Line and Vienna Insurance
Can any of the company-specific risk be diversified away by investing in both Direct Line and Vienna Insurance 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 Vienna Insurance 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 Vienna Insurance Group, you can compare the effects of market volatilities on Direct Line and Vienna Insurance 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 Vienna Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Vienna Insurance.
Diversification Opportunities for Direct Line and Vienna Insurance
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direct and Vienna is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance 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 Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Direct Line i.e., Direct Line and Vienna Insurance go up and down completely randomly.
Pair Corralation between Direct Line and Vienna Insurance
Assuming the 90 days trading horizon Direct Line is expected to generate 2.04 times less return on investment than Vienna Insurance. In addition to that, Direct Line is 1.02 times more volatile than Vienna Insurance Group. It trades about 0.11 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.22 per unit of volatility. If you would invest 3,030 in Vienna Insurance Group on October 24, 2024 and sell it today you would earn a total of 105.00 from holding Vienna Insurance Group or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. Vienna Insurance Group
Performance |
| Timeline |
| Direct Line Insurance |
| Vienna Insurance |
Direct Line and Vienna Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Vienna Insurance
The main advantage of trading using opposite Direct Line and Vienna Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Vienna Insurance 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 Vienna Insurance will offset losses from the drop in Vienna Insurance's long position.| Direct Line vs. Geely Automobile Holdings | Direct Line vs. Gladstone Investment | Direct Line vs. Tower One Wireless | Direct Line vs. ECHO INVESTMENT ZY |
| Vienna Insurance vs. Casio Computer CoLtd | Vienna Insurance vs. Luckin Coffee | Vienna Insurance vs. SWISS WATER DECAFFCOFFEE | Vienna Insurance vs. CVW CLEANTECH 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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