Correlation Between Direct Line and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Direct Line and Plexus Corp 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 Plexus Corp 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 Plexus Corp, you can compare the effects of market volatilities on Direct Line and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Plexus Corp.
Diversification Opportunities for Direct Line and Plexus Corp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direct and Plexus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Direct Line i.e., Direct Line and Plexus Corp go up and down completely randomly.
Pair Corralation between Direct Line and Plexus Corp
Assuming the 90 days horizon Direct Line Insurance is expected to generate 5.38 times more return on investment than Plexus Corp. However, Direct Line is 5.38 times more volatile than Plexus Corp. It trades about 0.35 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.17 per unit of risk. If you would invest 790.00 in Direct Line Insurance on September 13, 2024 and sell it today you would earn a total of 463.00 from holding Direct Line Insurance or generate 58.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Direct Line Insurance vs. Plexus Corp
Performance |
| Timeline |
| Direct Line Insurance |
| Plexus Corp |
Direct Line and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Plexus Corp
The main advantage of trading using opposite Direct Line and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Direct Line vs. Cardinal Health | Direct Line vs. Arm Holdings plc | Direct Line vs. Black Hills | Direct Line vs. Amkor Technology |
| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |