Correlation Between Donegal Group and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Donegal Group and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Stewart Information.
Diversification Opportunities for Donegal Group and Stewart Information
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Donegal and Stewart is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group B and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Donegal Group i.e., Donegal Group and Stewart Information go up and down completely randomly.
Pair Corralation between Donegal Group and Stewart Information
Assuming the 90 days horizon Donegal Group is expected to generate 1.02 times less return on investment than Stewart Information. In addition to that, Donegal Group is 1.97 times more volatile than Stewart Information Services. It trades about 0.02 of its total potential returns per unit of risk. Stewart Information Services is currently generating about 0.05 per unit of volatility. If you would invest 5,869 in Stewart Information Services on December 16, 2024 and sell it today you would earn a total of 1,293 from holding Stewart Information Services or generate 22.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.7% |
| Values | Daily Returns |
Donegal Group B vs. Stewart Information Services
Performance |
| Timeline |
| Donegal Group B |
| Stewart Information |
Donegal Group and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Group and Stewart Information
The main advantage of trading using opposite Donegal Group and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Donegal Group vs. Horace Mann Educators | ||
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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