Correlation Between Siriuspoint and Direct Line
Can any of the company-specific risk be diversified away by investing in both Siriuspoint 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 Siriuspoint and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siriuspoint and Direct Line Insurance, you can compare the effects of market volatilities on Siriuspoint 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 Siriuspoint with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siriuspoint and Direct Line.
Diversification Opportunities for Siriuspoint and Direct Line
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Siriuspoint and Direct is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint 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 Siriuspoint 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 Siriuspoint 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 Siriuspoint i.e., Siriuspoint and Direct Line go up and down completely randomly.
Pair Corralation between Siriuspoint and Direct Line
Given the investment horizon of 90 days Siriuspoint is expected to under-perform the Direct Line. In addition to that, Siriuspoint is 4.05 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 0.14 per unit of volatility. If you would invest 1,253 in Direct Line Insurance on October 11, 2024 and sell it today you would earn a total of 34.00 from holding Direct Line Insurance or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siriuspoint vs. Direct Line Insurance
Performance |
| Timeline |
| Siriuspoint |
| Direct Line Insurance |
Siriuspoint and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siriuspoint and Direct Line
The main advantage of trading using opposite Siriuspoint and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint 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.| Siriuspoint vs. Maiden Holdings | Siriuspoint vs. Reinsurance Group of | Siriuspoint vs. Oxbridge Re Holdings | Siriuspoint vs. Greenlight Capital Re |
| Direct Line vs. Minerals Technologies | Direct Line vs. Emerson Radio | Direct Line vs. IPG Photonics | Direct Line vs. NetEase |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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