Correlation Between DL Industries and National Reinsurance

Can any of the company-specific risk be diversified away by investing in both DL Industries and National Reinsurance 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 DL Industries and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DL Industries and National Reinsurance, you can compare the effects of market volatilities on DL Industries and National Reinsurance 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 DL Industries with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DL Industries and National Reinsurance.

Diversification Opportunities for DL Industries and National Reinsurance

0.68

Correlation Coefficient

DL Industries  National Reinsurance

Poor diversification

The 3 months correlation between DNL and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DL Industries and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and DL Industries 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 DL Industries are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of DL Industries i.e., DL Industries and National Reinsurance go up and down completely randomly.

Pair Corralation between DL Industries and National Reinsurance

Assuming the 90 days trading horizon DL Industries is expected to generate 0.14 times more return on investment than National Reinsurance. However, DL Industries is 7.1 times less risky than National Reinsurance. It trades about -0.07 of its potential returns per unit of risk. National Reinsurance is currently generating about -0.08 per unit of risk. If you would invest  613.00  in DL Industries on October 11, 2024 and sell it today you would lose (13.00) from holding DL Industries or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

DL Industries  vs.  National Reinsurance

DL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

National Reinsurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with DL Industries and National Reinsurance

The main advantage of trading using opposite DL Industries and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DL Industries position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.

The idea behind DL Industries and National Reinsurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.