Correlation Between Lipocine and Direct Line
Can any of the company-specific risk be diversified away by investing in both Lipocine 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 Lipocine and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipocine and Direct Line Insurance, you can compare the effects of market volatilities on Lipocine 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 Lipocine with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and Direct Line.
Diversification Opportunities for Lipocine and Direct Line
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lipocine and Direct is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine 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 Lipocine 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 Lipocine 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 Lipocine i.e., Lipocine and Direct Line go up and down completely randomly.
Pair Corralation between Lipocine and Direct Line
Given the investment horizon of 90 days Lipocine is expected to under-perform the Direct Line. In addition to that, Lipocine is 1.72 times more volatile than Direct Line Insurance. It trades about -0.02 of its total potential returns per unit of risk. Direct Line Insurance is currently generating about 0.04 per unit of volatility. If you would invest 1,056 in Direct Line Insurance on September 3, 2024 and sell it today you would earn a total of 129.00 from holding Direct Line Insurance or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipocine vs. Direct Line Insurance
Performance |
| Timeline |
| Lipocine |
| Direct Line Insurance |
Lipocine and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipocine and Direct Line
The main advantage of trading using opposite Lipocine and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine 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.| Lipocine vs. DiaMedica Therapeutics | Lipocine vs. Lyra Therapeutics | Lipocine vs. Centessa Pharmaceuticals PLC |
| Direct Line vs. Lipocine | Direct Line vs. Spyre Therapeutics | Direct Line vs. Atmos Energy | Direct Line vs. Regeneron Pharmaceuticals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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