Correlation Between Direct Line and ATRESMEDIA
Can any of the company-specific risk be diversified away by investing in both Direct Line and ATRESMEDIA 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 ATRESMEDIA 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 ATRESMEDIA, you can compare the effects of market volatilities on Direct Line and ATRESMEDIA 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 ATRESMEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and ATRESMEDIA.
Diversification Opportunities for Direct Line and ATRESMEDIA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direct and ATRESMEDIA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA 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 ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of Direct Line i.e., Direct Line and ATRESMEDIA go up and down completely randomly.
Pair Corralation between Direct Line and ATRESMEDIA
Assuming the 90 days trading horizon Direct Line Insurance is expected to generate 8.95 times more return on investment than ATRESMEDIA. However, Direct Line is 8.95 times more volatile than ATRESMEDIA. It trades about 0.25 of its potential returns per unit of risk. ATRESMEDIA is currently generating about 0.27 per unit of risk. If you would invest 205.00 in Direct Line Insurance on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Direct Line Insurance or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. ATRESMEDIA
Performance |
| Timeline |
| Direct Line Insurance |
| ATRESMEDIA |
Direct Line and ATRESMEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and ATRESMEDIA
The main advantage of trading using opposite Direct Line and ATRESMEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, ATRESMEDIA 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 ATRESMEDIA will offset losses from the drop in ATRESMEDIA's long position.| Direct Line vs. NN Group NV | Direct Line vs. Superior Plus Corp | Direct Line vs. Origin Agritech | Direct Line vs. Identiv |
| ATRESMEDIA vs. Singapore Reinsurance | ATRESMEDIA vs. Safety Insurance Group | ATRESMEDIA vs. Direct Line Insurance | ATRESMEDIA vs. LIFENET INSURANCE CO |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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