Correlation Between Donegal Group and Heritage Insurance
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Heritage Insurance 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 Heritage Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Donegal Group B and Heritage Insurance Hldgs, you can compare the effects of market volatilities on Donegal Group and Heritage Insurance 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 Heritage Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Heritage Insurance.
Diversification Opportunities for Donegal Group and Heritage Insurance
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Donegal and Heritage is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group B and Heritage Insurance Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Insurance Hldgs 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 B are associated (or correlated) with Heritage Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Insurance Hldgs has no effect on the direction of Donegal Group i.e., Donegal Group and Heritage Insurance go up and down completely randomly.
Pair Corralation between Donegal Group and Heritage Insurance
Assuming the 90 days horizon Donegal Group B is expected to generate 1.11 times more return on investment than Heritage Insurance. However, Donegal Group is 1.11 times more volatile than Heritage Insurance Hldgs. It trades about 0.05 of its potential returns per unit of risk. Heritage Insurance Hldgs is currently generating about -0.05 per unit of risk. If you would invest 1,460 in Donegal Group B on October 20, 2024 and sell it today you would earn a total of 28.00 from holding Donegal Group B or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Donegal Group B vs. Heritage Insurance Hldgs
Performance |
| Timeline |
| Donegal Group B |
| Heritage Insurance Hldgs |
Donegal Group and Heritage Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Heritage Insurance
The main advantage of trading using opposite Donegal Group and Heritage Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Heritage Insurance 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 Heritage Insurance will offset losses from the drop in Heritage Insurance's long position.| Donegal Group vs. Horace Mann Educators | Donegal Group vs. United Fire Group | Donegal Group vs. Donegal Group A | Donegal Group vs. Global Indemnity PLC |
| Heritage Insurance vs. Universal Insurance Holdings | Heritage Insurance vs. Donegal Group B | Heritage Insurance vs. Horace Mann Educators | Heritage Insurance vs. NI Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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