Correlation Between Aeye and Donegal Group

Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeye Inc and Donegal Group B, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Donegal Group.

Diversification Opportunities for Aeye and Donegal Group

-0.39

Correlation Coefficient

Aeye  Donegal Group

Very good diversification

The 3 months correlation between Aeye and Donegal is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc 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 Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and Donegal Group go up and down completely randomly.

Pair Corralation between Aeye and Donegal Group

Given the investment horizon of 90 days Aeye is expected to generate 3.99 times less return on investment than Donegal Group. In addition to that, Aeye is 2.96 times more volatile than Donegal Group B. It trades about 0.0 of its total potential returns per unit of risk. Donegal Group B is currently generating about 0.02 per unit of volatility. If you would invest  1,341  in Donegal Group B on September 14, 2024 and sell it today you would earn a total of  119.00  from holding Donegal Group B or generate 8.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.93%
Values	Daily Returns

Aeye Inc  vs.  Donegal Group B

Aeye Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aeye Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Aeye may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Donegal Group B

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Group B are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Donegal Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeye and Donegal Group

The main advantage of trading using opposite Aeye and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.

The idea behind Aeye Inc and Donegal Group B pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.