Correlation Between URBAN OUTFITTERS and Direct Line
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS 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 URBAN OUTFITTERS and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and Direct Line Insurance, you can compare the effects of market volatilities on URBAN OUTFITTERS 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 URBAN OUTFITTERS with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Direct Line.
Diversification Opportunities for URBAN OUTFITTERS and Direct Line
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between URBAN and Direct is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Direct Line go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and Direct Line
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 2.56 times more return on investment than Direct Line. However, URBAN OUTFITTERS is 2.56 times more volatile than Direct Line Insurance. It trades about 0.17 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.11 per unit of risk. If you would invest 5,300 in URBAN OUTFITTERS on October 26, 2024 and sell it today you would earn a total of 350.00 from holding URBAN OUTFITTERS or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. Direct Line Insurance
Performance |
| Timeline |
| URBAN OUTFITTERS |
| Direct Line Insurance |
URBAN OUTFITTERS and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and Direct Line
The main advantage of trading using opposite URBAN OUTFITTERS and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS 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.| URBAN OUTFITTERS vs. GALENA MINING LTD | URBAN OUTFITTERS vs. ADRIATIC METALS LS 013355 | URBAN OUTFITTERS vs. Webster Financial | URBAN OUTFITTERS vs. CHIBA BANK |
| Direct Line vs. REINET INVESTMENTS SCA | Direct Line vs. PENN NATL GAMING | Direct Line vs. URBAN OUTFITTERS | Direct Line vs. MOVIE GAMES SA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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