Correlation Between Direct Line and Clearway
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By analyzing existing cross correlation between Direct Line Insurance and Clearway Energy Operating, you can compare the effects of market volatilities on Direct Line and Clearway 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 Clearway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Clearway.
Diversification Opportunities for Direct Line and Clearway
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direct and Clearway is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Clearway Energy Operating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Operating 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 Clearway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Operating has no effect on the direction of Direct Line i.e., Direct Line and Clearway go up and down completely randomly.
Pair Corralation between Direct Line and Clearway
Assuming the 90 days horizon Direct Line Insurance is expected to generate 5.66 times more return on investment than Clearway. However, Direct Line is 5.66 times more volatile than Clearway Energy Operating. It trades about 0.21 of its potential returns per unit of risk. Clearway Energy Operating is currently generating about -0.23 per unit of risk. If you would invest 864.00 in Direct Line Insurance on September 5, 2024 and sell it today you would earn a total of 283.00 from holding Direct Line Insurance or generate 32.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Direct Line Insurance vs. Clearway Energy Operating
Performance |
| Timeline |
| Direct Line Insurance |
| Clearway Energy Operating |
Direct Line and Clearway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Clearway
The main advantage of trading using opposite Direct Line and Clearway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Clearway 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 Clearway will offset losses from the drop in Clearway's long position.| Direct Line vs. Hooker Furniture | Direct Line vs. Mesa Air Group | Direct Line vs. United Guardian | Direct Line vs. JD Sports Fashion |
| Clearway vs. Sun Life Financial | Clearway vs. GoHealth | Clearway vs. Wicket Gaming AB | Clearway vs. Direct Line Insurance |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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