Correlation Between Allstate and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Allstate and Donegal Group 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 Allstate and Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and Donegal Group B, you can compare the effects of market volatilities on Allstate and Donegal Group 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 Allstate with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and Donegal Group.
Diversification Opportunities for Allstate and Donegal Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allstate and Donegal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Donegal Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group B and Allstate 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 The Allstate are associated (or correlated) with Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group B has no effect on the direction of Allstate i.e., Allstate and Donegal Group go up and down completely randomly.
Pair Corralation between Allstate and Donegal Group
Assuming the 90 days trading horizon The Allstate is expected to under-perform the Donegal Group. But the preferred stock apears to be less risky and, when comparing its historical volatility, The Allstate is 3.33 times less risky than Donegal Group. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Donegal Group B is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,257 in Donegal Group B on August 24, 2024 and sell it today you would earn a total of 178.00 from holding Donegal Group B or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
The Allstate vs. Donegal Group B
Performance |
| Timeline |
| Allstate |
| Donegal Group B |
Allstate and Donegal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allstate and Donegal Group
The main advantage of trading using opposite Allstate and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate position performs unexpectedly, Donegal Group 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 Donegal Group will offset losses from the drop in Donegal Group's long position.| Allstate vs. Aspen Insurance Holdings | Allstate vs. The Allstate | Allstate vs. Aspen Insurance Holdings | Allstate vs. AmTrust Financial Services |
| Donegal Group vs. Horace Mann Educators | Donegal Group vs. United Fire Group | Donegal Group vs. Donegal Group A | Donegal Group vs. Global Indemnity PLC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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