Correlation Between Entegris and Direct Line
Can any of the company-specific risk be diversified away by investing in both Entegris and Direct Line 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 Entegris and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entegris and Direct Line Insurance, you can compare the effects of market volatilities on Entegris and Direct Line 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 Entegris with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entegris and Direct Line.
Diversification Opportunities for Entegris and Direct Line
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Entegris and Direct is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and Entegris 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 Entegris are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of Entegris i.e., Entegris and Direct Line go up and down completely randomly.
Pair Corralation between Entegris and Direct Line
Given the investment horizon of 90 days Entegris is expected to generate 21.0 times less return on investment than Direct Line. But when comparing it to its historical volatility, Entegris is 3.05 times less risky than Direct Line. It trades about 0.05 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 828.00 in Direct Line Insurance on September 12, 2024 and sell it today you would earn a total of 425.00 from holding Direct Line Insurance or generate 51.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Entegris vs. Direct Line Insurance
Performance |
| Timeline |
| Entegris |
| Direct Line Insurance |
Entegris and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entegris and Direct Line
The main advantage of trading using opposite Entegris and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| Entegris vs. Teradyne | Entegris vs. Ichor Holdings | Entegris vs. Amtech Systems | Entegris vs. Veeco Instruments |
| Direct Line vs. Berkshire Hathaway | Direct Line vs. Berkshire Hathaway | Direct Line vs. Zurich Insurance Group | Direct Line vs. Zurich Insurance Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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