Correlation Between Lendinvest PLC and Direct Line
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC 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 Lendinvest PLC and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and Direct Line Insurance, you can compare the effects of market volatilities on Lendinvest PLC 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 Lendinvest PLC with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and Direct Line.
Diversification Opportunities for Lendinvest PLC and Direct Line
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lendinvest and Direct is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC i.e., Lendinvest PLC and Direct Line go up and down completely randomly.
Pair Corralation between Lendinvest PLC and Direct Line
Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the Direct Line. But the stock apears to be less risky and, when comparing its historical volatility, Lendinvest PLC is 1.52 times less risky than Direct Line. The stock trades about -0.11 of its potential returns per unit of risk. The Direct Line Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,312 in Direct Line Insurance on November 27, 2024 and sell it today you would earn a total of 11,188 from holding Direct Line Insurance or generate 73.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.26% |
| Values | Daily Returns |
Lendinvest PLC vs. Direct Line Insurance
Performance |
| Timeline |
| Lendinvest PLC |
| Direct Line Insurance |
Lendinvest PLC and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and Direct Line
The main advantage of trading using opposite Lendinvest PLC and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC 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.| Lendinvest PLC vs. Livermore Investments Group | Lendinvest PLC vs. Lloyds Banking Group | Lendinvest PLC vs. Liechtensteinische Landesbank AG | Lendinvest PLC vs. National Beverage Corp |
| Direct Line vs. Everyman Media Group | Direct Line vs. Aptitude Software Group | Direct Line vs. LBG Media PLC | Direct Line vs. Dentsply Sirona |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stocks Directory Find actively traded stocks across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |