Correlation Between Direct Line and Jupiter Fund
Can any of the company-specific risk be diversified away by investing in both Direct Line and Jupiter Fund 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 Jupiter Fund 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 Jupiter Fund Management, you can compare the effects of market volatilities on Direct Line and Jupiter Fund 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 Jupiter Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Jupiter Fund.
Diversification Opportunities for Direct Line and Jupiter Fund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direct and Jupiter is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management 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 Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of Direct Line i.e., Direct Line and Jupiter Fund go up and down completely randomly.
Pair Corralation between Direct Line and Jupiter Fund
Assuming the 90 days trading horizon Direct Line Insurance is expected to under-perform the Jupiter Fund. In addition to that, Direct Line is 1.25 times more volatile than Jupiter Fund Management. It trades about -0.16 of its total potential returns per unit of risk. Jupiter Fund Management is currently generating about 0.09 per unit of volatility. If you would invest 8,140 in Jupiter Fund Management on August 29, 2024 and sell it today you would earn a total of 190.00 from holding Jupiter Fund Management or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. Jupiter Fund Management
Performance |
| Timeline |
| Direct Line Insurance |
| Jupiter Fund Management |
Direct Line and Jupiter Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Jupiter Fund
The main advantage of trading using opposite Direct Line and Jupiter Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, Jupiter Fund 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 Jupiter Fund will offset losses from the drop in Jupiter Fund's long position.| Direct Line vs. Toyota Motor Corp | Direct Line vs. Lendinvest PLC | Direct Line vs. Neometals | Direct Line vs. Coor Service Management |
| Jupiter Fund vs. Toyota Motor Corp | Jupiter Fund vs. Lendinvest PLC | Jupiter Fund vs. Neometals | Jupiter Fund vs. Coor Service Management |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |