Correlation Between Direct Line and DNB Asian
Can any of the company-specific risk be diversified away by investing in both Direct Line and DNB Asian 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 Direct Line and DNB Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Line Insurance and DNB Asian Small, you can compare the effects of market volatilities on Direct Line and DNB Asian 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 Direct Line with a short position of DNB Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and DNB Asian.
Diversification Opportunities for Direct Line and DNB Asian
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direct and DNB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and DNB Asian Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB Asian Small and Direct Line 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 Direct Line Insurance are associated (or correlated) with DNB Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB Asian Small has no effect on the direction of Direct Line i.e., Direct Line and DNB Asian go up and down completely randomly.
Pair Corralation between Direct Line and DNB Asian
If you would invest 290.00 in Direct Line Insurance on December 20, 2024 and sell it today you would earn a total of 45.00 from holding Direct Line Insurance or generate 15.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 1.69% |
Values | Daily Returns |
Direct Line Insurance vs. DNB Asian Small
Performance |
Timeline |
Direct Line Insurance |
DNB Asian Small |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Direct Line and DNB Asian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direct Line and DNB Asian
The main advantage of trading using opposite Direct Line and DNB Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line position performs unexpectedly, DNB Asian 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 DNB Asian will offset losses from the drop in DNB Asian's long position.Direct Line vs. Dalata Hotel Group | Direct Line vs. tokentus investment AG | Direct Line vs. Tamburi Investment Partners | Direct Line vs. InterContinental Hotels Group |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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