Correlation Between Donegal Investment and Greencoat Renewables

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

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

Diversification Opportunities for Donegal Investment and Greencoat Renewables

0.16

Correlation Coefficient

Donegal Investment  Greencoat Renewables

Average diversification

The 3 months correlation between Donegal and Greencoat is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Investment Group and Greencoat Renewables PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat Renewables PLC and Donegal Investment 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 Investment Group are associated (or correlated) with Greencoat Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat Renewables PLC has no effect on the direction of Donegal Investment i.e., Donegal Investment and Greencoat Renewables go up and down completely randomly.

Pair Corralation between Donegal Investment and Greencoat Renewables

Assuming the 90 days trading horizon Donegal Investment Group is expected to generate 0.18 times more return on investment than Greencoat Renewables. However, Donegal Investment Group is 5.48 times less risky than Greencoat Renewables. It trades about 0.04 of its potential returns per unit of risk. Greencoat Renewables PLC is currently generating about -0.15 per unit of risk. If you would invest  1,650  in Donegal Investment Group on September 17, 2024 and sell it today you would earn a total of  10.00  from holding Donegal Investment Group or generate 0.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Donegal Investment Group  vs.  Greencoat Renewables PLC

Donegal Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Donegal Investment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Greencoat Renewables PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greencoat Renewables PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Donegal Investment and Greencoat Renewables

The main advantage of trading using opposite Donegal Investment and Greencoat Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Investment position performs unexpectedly, Greencoat Renewables 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 Greencoat Renewables will offset losses from the drop in Greencoat Renewables' long position.

The idea behind Donegal Investment Group and Greencoat Renewables PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.