Correlation Between Donegal Group and Mercury General
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Mercury General 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 Mercury General 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 Mercury General, you can compare the effects of market volatilities on Donegal Group and Mercury General 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 Mercury General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Mercury General.
Diversification Opportunities for Donegal Group and Mercury General
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Donegal and Mercury is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group B and Mercury General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury General 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 Mercury General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury General has no effect on the direction of Donegal Group i.e., Donegal Group and Mercury General go up and down completely randomly.
Pair Corralation between Donegal Group and Mercury General
Assuming the 90 days horizon Donegal Group is expected to generate 76.83 times less return on investment than Mercury General. In addition to that, Donegal Group is 1.16 times more volatile than Mercury General. It trades about 0.0 of its total potential returns per unit of risk. Mercury General is currently generating about 0.18 per unit of volatility. If you would invest 7,186 in Mercury General on August 31, 2024 and sell it today you would earn a total of 699.00 from holding Mercury General or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Donegal Group B vs. Mercury General
Performance |
| Timeline |
| Donegal Group B |
| Mercury General |
Donegal Group and Mercury General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Mercury General
The main advantage of trading using opposite Donegal Group and Mercury General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Mercury General 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 Mercury General will offset losses from the drop in Mercury General's long position.| Donegal Group vs. Progressive Corp | Donegal Group vs. Chubb | Donegal Group vs. The Allstate | Donegal Group vs. Selective Insurance Group |
| Mercury General vs. Selective Insurance Group | Mercury General vs. Kemper | Mercury General vs. Donegal Group B | Mercury General 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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