Correlation Between Donegal Group and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Safety 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 Safety 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 Safety Insurance Group, you can compare the effects of market volatilities on Donegal Group and Safety 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 Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Safety Insurance.
Diversification Opportunities for Donegal Group and Safety Insurance
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Donegal and Safety is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group B and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance 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 Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Donegal Group i.e., Donegal Group and Safety Insurance go up and down completely randomly.
Pair Corralation between Donegal Group and Safety Insurance
Assuming the 90 days horizon Donegal Group is expected to generate 1.13 times less return on investment than Safety Insurance. In addition to that, Donegal Group is 2.21 times more volatile than Safety Insurance Group. It trades about 0.01 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about 0.03 per unit of volatility. If you would invest 7,252 in Safety Insurance Group on November 9, 2024 and sell it today you would earn a total of 676.00 from holding Safety Insurance Group or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.27% |
| Values | Daily Returns |
Donegal Group B vs. Safety Insurance Group
Performance |
| Timeline |
| Donegal Group B |
| Safety Insurance |
Donegal Group and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Safety Insurance
The main advantage of trading using opposite Donegal Group and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Safety 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 Safety Insurance will offset losses from the drop in Safety 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 |
| Safety Insurance vs. Selective Insurance Group | Safety Insurance vs. Kemper | Safety Insurance vs. Donegal Group B | Safety Insurance 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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