Correlation Between Thor Mining and Direct Line
Can any of the company-specific risk be diversified away by investing in both Thor Mining 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 Thor Mining and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Mining PLC and Direct Line Insurance, you can compare the effects of market volatilities on Thor Mining 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 Thor Mining with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Mining and Direct Line.
Diversification Opportunities for Thor Mining and Direct Line
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thor and Direct is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining 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 Thor Mining 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 Thor Mining 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 Thor Mining i.e., Thor Mining and Direct Line go up and down completely randomly.
Pair Corralation between Thor Mining and Direct Line
Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Direct Line. In addition to that, Thor Mining is 1.2 times more volatile than Direct Line Insurance. It trades about -0.03 of its total potential returns per unit of risk. Direct Line Insurance is currently generating about 0.09 per unit of volatility. If you would invest 18,807 in Direct Line Insurance on November 28, 2024 and sell it today you would earn a total of 7,833 from holding Direct Line Insurance or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Mining PLC vs. Direct Line Insurance
Performance |
| Timeline |
| Thor Mining PLC |
| Direct Line Insurance |
Thor Mining and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Mining and Direct Line
The main advantage of trading using opposite Thor Mining and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Mining 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.| Thor Mining vs. Givaudan SA | Thor Mining vs. Antofagasta PLC | Thor Mining vs. Atalaya Mining | Thor Mining vs. Ferrexpo PLC |
| Direct Line vs. Heavitree Brewery | Direct Line vs. Air Products Chemicals | Direct Line vs. Ryanair Holdings plc | Direct Line vs. Zoom Video Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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