Correlation Between Donegal Group and ProAssurance
Can any of the company-specific risk be diversified away by investing in both Donegal Group and ProAssurance 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 ProAssurance 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 ProAssurance, you can compare the effects of market volatilities on Donegal Group and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and ProAssurance.
Diversification Opportunities for Donegal Group and ProAssurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Donegal and ProAssurance is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group B and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Donegal Group i.e., Donegal Group and ProAssurance go up and down completely randomly.
Pair Corralation between Donegal Group and ProAssurance
Assuming the 90 days horizon Donegal Group B is expected to under-perform the ProAssurance. In addition to that, Donegal Group is 1.07 times more volatile than ProAssurance. It trades about -0.04 of its total potential returns per unit of risk. ProAssurance is currently generating about 0.17 per unit of volatility. If you would invest 1,537 in ProAssurance on August 28, 2024 and sell it today you would earn a total of 138.00 from holding ProAssurance or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Donegal Group B vs. ProAssurance
Performance |
| Timeline |
| Donegal Group B |
| ProAssurance |
Donegal Group and ProAssurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and ProAssurance
The main advantage of trading using opposite Donegal Group and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance'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 |
| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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