Correlation Between Direct Line and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Direct Line and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Direct Line and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Hollywood Bowl.
Diversification Opportunities for Direct Line and Hollywood Bowl
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direct and Hollywood is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Direct Line i.e., Direct Line and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Direct Line and Hollywood Bowl
Assuming the 90 days trading horizon Direct Line Insurance is expected to under-perform the Hollywood Bowl. In addition to that, Direct Line is 1.47 times more volatile than Hollywood Bowl Group. It trades about 0.0 of its total potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.08 per unit of volatility. If you would invest 17,978 in Hollywood Bowl Group on August 30, 2024 and sell it today you would earn a total of 14,072 from holding Hollywood Bowl Group or generate 78.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Direct Line Insurance vs. Hollywood Bowl Group
Performance |
| Timeline |
| Direct Line Insurance |
| Hollywood Bowl Group |
Direct Line and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Hollywood Bowl
The main advantage of trading using opposite Direct Line and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| Direct Line vs. Toyota Motor Corp | Direct Line vs. Lendinvest PLC | Direct Line vs. Neometals | Direct Line vs. Coor Service Management |
| Hollywood Bowl vs. Ondine Biomedical | Hollywood Bowl vs. Europa Metals | Hollywood Bowl vs. Lendinvest PLC | Hollywood Bowl vs. Neometals |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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