Correlation Between HLNLN and Direct Line
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By analyzing existing cross correlation between HLNLN 3125 24 MAR 25 and Direct Line Insurance, you can compare the effects of market volatilities on HLNLN 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 HLNLN with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of HLNLN and Direct Line.
Diversification Opportunities for HLNLN and Direct Line
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between HLNLN and Direct is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HLNLN 3125 24 MAR 25 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 HLNLN 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 HLNLN 3125 24 MAR 25 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 HLNLN i.e., HLNLN and Direct Line go up and down completely randomly.
Pair Corralation between HLNLN and Direct Line
Assuming the 90 days trading horizon HLNLN 3125 24 MAR 25 is expected to under-perform the Direct Line. But the bond apears to be less risky and, when comparing its historical volatility, HLNLN 3125 24 MAR 25 is 6.64 times less risky than Direct Line. The bond trades about -0.22 of its potential returns per unit of risk. The 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 | 85.71% |
| Values | Daily Returns |
HLNLN 3125 24 MAR 25 vs. Direct Line Insurance
Performance |
| Timeline |
| HLNLN 3125 24 |
| Direct Line Insurance |
HLNLN and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HLNLN and Direct Line
The main advantage of trading using opposite HLNLN and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HLNLN 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.| HLNLN vs. Direct Line Insurance | HLNLN vs. The Hanover Insurance | HLNLN vs. Warner Music Group | HLNLN vs. Old Republic International |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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