Correlation Between Direct Line and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Direct Line and Catalyst Media 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 Catalyst Media 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 Catalyst Media Group, you can compare the effects of market volatilities on Direct Line and Catalyst Media 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 Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Catalyst Media.
Diversification Opportunities for Direct Line and Catalyst Media
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direct and Catalyst is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Direct Line i.e., Direct Line and Catalyst Media go up and down completely randomly.
Pair Corralation between Direct Line and Catalyst Media
Assuming the 90 days trading horizon Direct Line Insurance is expected to under-perform the Catalyst Media. In addition to that, Direct Line is 1.44 times more volatile than Catalyst Media Group. It trades about 0.0 of its total potential returns per unit of risk. Catalyst Media Group is currently generating about 0.0 per unit of volatility. If you would invest 9,680 in Catalyst Media Group on August 30, 2024 and sell it today you would lose (680.00) from holding Catalyst Media Group or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. Catalyst Media Group
Performance |
| Timeline |
| Direct Line Insurance |
| Catalyst Media Group |
Direct Line and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Catalyst Media
The main advantage of trading using opposite Direct Line and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Catalyst Media 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 Catalyst Media will offset losses from the drop in Catalyst Media's long position.| Direct Line vs. Toyota Motor Corp | Direct Line vs. Lendinvest PLC | Direct Line vs. Neometals | Direct Line vs. Coor Service Management |
| Catalyst Media vs. Walmart | Catalyst Media vs. BYD Co | Catalyst Media vs. Volkswagen AG | Catalyst Media vs. Volkswagen AG Non Vtg |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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