Correlation Between Donegal Group and Kemper
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Kemper 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 Kemper 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 Kemper, you can compare the effects of market volatilities on Donegal Group and Kemper 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 Kemper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Kemper.
Diversification Opportunities for Donegal Group and Kemper
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Donegal and Kemper is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group A and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Donegal Group i.e., Donegal Group and Kemper go up and down completely randomly.
Pair Corralation between Donegal Group and Kemper
Assuming the 90 days horizon Donegal Group A is expected to under-perform the Kemper. But the stock apears to be less risky and, when comparing its historical volatility, Donegal Group A is 1.25 times less risky than Kemper. The stock trades about -0.19 of its potential returns per unit of risk. The Kemper is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,543 in Kemper on November 2, 2024 and sell it today you would earn a total of 147.00 from holding Kemper or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Donegal Group A vs. Kemper
Performance |
| Timeline |
| Donegal Group A |
| Kemper |
Donegal Group and Kemper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Kemper
The main advantage of trading using opposite Donegal Group and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Kemper 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 Kemper will offset losses from the drop in Kemper'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 |
| Kemper vs. Selective Insurance Group | Kemper vs. Donegal Group B | Kemper vs. Argo Group International | Kemper 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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