Correlation Between Donegal Group and Argo Group
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Argo 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 Donegal Group and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Donegal Group A and Argo Group International, you can compare the effects of market volatilities on Donegal Group and Argo 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 Donegal Group with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Argo Group.
Diversification Opportunities for Donegal Group and Argo Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Donegal and Argo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group A and Argo Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group International and Donegal Group 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 Donegal Group A are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group International has no effect on the direction of Donegal Group i.e., Donegal Group and Argo Group go up and down completely randomly.
Pair Corralation between Donegal Group and Argo Group
Assuming the 90 days horizon Donegal Group is expected to generate 1.5 times less return on investment than Argo Group. In addition to that, Donegal Group is 1.7 times more volatile than Argo Group International. It trades about 0.03 of its total potential returns per unit of risk. Argo Group International is currently generating about 0.09 per unit of volatility. If you would invest 2,693 in Argo Group International on August 28, 2024 and sell it today you would earn a total of 281.00 from holding Argo Group International or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 28.78% |
| Values | Daily Returns |
Donegal Group A vs. Argo Group International
Performance |
| Timeline |
| Donegal Group A |
| Argo Group International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Donegal Group and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Argo Group
The main advantage of trading using opposite Donegal Group and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Argo 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 Argo Group will offset losses from the drop in Argo Group's long position.| Donegal Group vs. NI Holdings | Donegal Group vs. Horace Mann Educators | Donegal Group vs. Global Indemnity PLC | Donegal Group vs. Selective Insurance Group |
| Argo Group vs. Selective Insurance Group | Argo Group vs. Kemper | Argo Group vs. Donegal Group B | Argo Group vs. Argo Group International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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