Correlation Between Direct Line and JPMorgan ETFs
Can any of the company-specific risk be diversified away by investing in both Direct Line and JPMorgan ETFs 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 JPMorgan ETFs 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 JPMorgan ETFs ICAV, you can compare the effects of market volatilities on Direct Line and JPMorgan ETFs 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 JPMorgan ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and JPMorgan ETFs.
Diversification Opportunities for Direct Line and JPMorgan ETFs
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direct and JPMorgan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV 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 JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of Direct Line i.e., Direct Line and JPMorgan ETFs go up and down completely randomly.
Pair Corralation between Direct Line and JPMorgan ETFs
Assuming the 90 days trading horizon Direct Line Insurance is expected to under-perform the JPMorgan ETFs. In addition to that, Direct Line is 2.35 times more volatile than JPMorgan ETFs ICAV. It trades about -0.16 of its total potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about 0.0 per unit of volatility. If you would invest 312,780 in JPMorgan ETFs ICAV on August 29, 2024 and sell it today you would lose (285.00) from holding JPMorgan ETFs ICAV or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. JPMorgan ETFs ICAV
Performance |
| Timeline |
| Direct Line Insurance |
| JPMorgan ETFs ICAV |
Direct Line and JPMorgan ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and JPMorgan ETFs
The main advantage of trading using opposite Direct Line and JPMorgan ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, JPMorgan ETFs 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 JPMorgan ETFs will offset losses from the drop in JPMorgan ETFs' long position.| Direct Line vs. Toyota Motor Corp | Direct Line vs. Lendinvest PLC | Direct Line vs. Neometals | Direct Line vs. Coor Service Management |
| JPMorgan ETFs vs. Leverage Shares 3x | JPMorgan ETFs vs. Leverage Shares 3x | JPMorgan ETFs vs. GraniteShares 3x Short | JPMorgan ETFs vs. Leverage Shares 3x |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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