Correlation Between Selective Insurance and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Selective Insurance 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 Selective Insurance and Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selective Insurance Group and Donegal Group A, you can compare the effects of market volatilities on Selective Insurance 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 Selective Insurance with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Donegal Group.
Diversification Opportunities for Selective Insurance and Donegal Group
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Selective and Donegal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Donegal Group A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group A and Selective Insurance 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 Selective Insurance Group 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 A has no effect on the direction of Selective Insurance i.e., Selective Insurance and Donegal Group go up and down completely randomly.
Pair Corralation between Selective Insurance and Donegal Group
Assuming the 90 days horizon Selective Insurance Group is expected to generate 1.33 times more return on investment than Donegal Group. However, Selective Insurance is 1.33 times more volatile than Donegal Group A. It trades about 0.0 of its potential returns per unit of risk. Donegal Group A is currently generating about -0.33 per unit of risk. If you would invest 1,792 in Selective Insurance Group on October 20, 2024 and sell it today you would lose (5.00) from holding Selective Insurance Group or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Donegal Group A
Performance |
| Timeline |
| Selective Insurance |
| Donegal Group A |
Selective Insurance and Donegal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Donegal Group
The main advantage of trading using opposite Selective Insurance and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance 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.| Selective Insurance vs. Brighthouse Financial | Selective Insurance vs. First Citizens BancShares | Selective Insurance vs. Northern Trust | Selective Insurance vs. Dime Community Bancshares |
| Donegal Group vs. NI Holdings | Donegal Group vs. Horace Mann Educators | Donegal Group vs. Global Indemnity PLC | Donegal Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |