Correlation Between Direct Line and ISPIM
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By analyzing existing cross correlation between Direct Line Insurance and ISPIM 77, you can compare the effects of market volatilities on Direct Line and ISPIM 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 ISPIM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and ISPIM.
Diversification Opportunities for Direct Line and ISPIM
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Direct and ISPIM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and ISPIM 77 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISPIM 77 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 ISPIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISPIM 77 has no effect on the direction of Direct Line i.e., Direct Line and ISPIM go up and down completely randomly.
Pair Corralation between Direct Line and ISPIM
Assuming the 90 days horizon Direct Line Insurance is expected to generate 21.36 times more return on investment than ISPIM. However, Direct Line is 21.36 times more volatile than ISPIM 77. It trades about 0.22 of its potential returns per unit of risk. ISPIM 77 is currently generating about -0.04 per unit of risk. If you would invest 864.00 in Direct Line Insurance on September 4, 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 | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Direct Line Insurance vs. ISPIM 77
Performance |
| Timeline |
| Direct Line Insurance |
| ISPIM 77 |
Direct Line and ISPIM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and ISPIM
The main advantage of trading using opposite Direct Line and ISPIM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, ISPIM 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 ISPIM will offset losses from the drop in ISPIM's long position.| Direct Line vs. MACOM Technology Solutions | Direct Line vs. Kulicke and Soffa | Direct Line vs. Delek Drilling | Direct Line vs. Entegris |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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