Correlation Between Kemper and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Kemper and Donegal Group 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 Kemper and Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kemper and Donegal Group B, you can compare the effects of market volatilities on Kemper and Donegal Group 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 Kemper with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemper and Donegal Group.
Diversification Opportunities for Kemper and Donegal Group
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kemper and Donegal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and Donegal Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group B and Kemper 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 Kemper are associated (or correlated) with Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group B has no effect on the direction of Kemper i.e., Kemper and Donegal Group go up and down completely randomly.
Pair Corralation between Kemper and Donegal Group
Given the investment horizon of 90 days Kemper is expected to generate 1.7 times less return on investment than Donegal Group. But when comparing it to its historical volatility, Kemper is 2.22 times less risky than Donegal Group. It trades about 0.07 of its potential returns per unit of risk. Donegal Group B is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Kemper vs. Donegal Group B
Performance |
| Timeline |
| Kemper |
| Donegal Group B |
Kemper and Donegal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kemper and Donegal Group
The main advantage of trading using opposite Kemper and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper position performs unexpectedly, Donegal Group 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 Donegal Group will offset losses from the drop in Donegal Group's long position.| Kemper vs. Selective Insurance Group | Kemper vs. Donegal Group B | Kemper vs. Argo Group International | Kemper vs. Global Indemnity PLC |
| Donegal Group vs. Horace Mann Educators | Donegal Group vs. United Fire Group | Donegal Group vs. Donegal Group A | Donegal Group vs. Global Indemnity PLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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