Correlation Between 207597EH4 and Direct Line
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By analyzing existing cross correlation between CONNECTICUT LT PWR and Direct Line Insurance, you can compare the effects of market volatilities on 207597EH4 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 207597EH4 with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of 207597EH4 and Direct Line.
Diversification Opportunities for 207597EH4 and Direct Line
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 207597EH4 and Direct is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CONNECTICUT LT PWR 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 207597EH4 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 CONNECTICUT LT PWR 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 207597EH4 i.e., 207597EH4 and Direct Line go up and down completely randomly.
Pair Corralation between 207597EH4 and Direct Line
Assuming the 90 days trading horizon 207597EH4 is expected to generate 5.44 times less return on investment than Direct Line. But when comparing it to its historical volatility, CONNECTICUT LT PWR is 4.13 times less risky than Direct Line. It trades about 0.18 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 864.00 in Direct Line Insurance on September 2, 2024 and sell it today you would earn a total of 317.00 from holding Direct Line Insurance or generate 36.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
CONNECTICUT LT PWR vs. Direct Line Insurance
Performance |
| Timeline |
| CONNECTICUT LT PWR |
| Direct Line Insurance |
207597EH4 and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 207597EH4 and Direct Line
The main advantage of trading using opposite 207597EH4 and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 207597EH4 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.| 207597EH4 vs. Direct Line Insurance | 207597EH4 vs. Assurant | 207597EH4 vs. Employers Holdings | 207597EH4 vs. QBE Insurance Group |
| Direct Line vs. Ryanair Holdings PLC | Direct Line vs. Air Transport Services | Direct Line vs. Xunlei Ltd Adr | Direct Line vs. Boston Omaha Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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