Correlation Between Donegal Group and Aeye
Can any of the company-specific risk be diversified away by investing in both Donegal Group and Aeye 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 Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Donegal Group A and Aeye Inc, you can compare the effects of market volatilities on Donegal Group and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Group and Aeye.
Diversification Opportunities for Donegal Group and Aeye
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Donegal and Aeye is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Group A and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 A are associated (or correlated) with Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Donegal Group i.e., Donegal Group and Aeye go up and down completely randomly.
Pair Corralation between Donegal Group and Aeye
Assuming the 90 days horizon Donegal Group A is expected to generate 0.13 times more return on investment than Aeye. However, Donegal Group A is 7.54 times less risky than Aeye. It trades about 0.27 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.09 per unit of risk. If you would invest 1,519 in Donegal Group A on December 28, 2024 and sell it today you would earn a total of 397.00 from holding Donegal Group A or generate 26.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Donegal Group A vs. Aeye Inc
Performance |
Timeline |
Donegal Group A |
Aeye Inc |
Donegal Group and Aeye Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Donegal Group and Aeye
The main advantage of trading using opposite Donegal Group and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Group position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.Donegal Group vs. NI Holdings | Donegal Group vs. Horace Mann Educators | Donegal Group vs. Global Indemnity PLC | Donegal Group vs. Selective Insurance Group |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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