Correlation Between Kingstone Companies and Donegal Group
Can any of the company-specific risk be diversified away by investing in both Kingstone Companies 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 Kingstone Companies and Donegal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingstone Companies and Donegal Group A, you can compare the effects of market volatilities on Kingstone Companies 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 Kingstone Companies with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstone Companies and Donegal Group.
Diversification Opportunities for Kingstone Companies and Donegal Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kingstone and Donegal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kingstone Companies 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 Kingstone Companies 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 Kingstone Companies 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 Kingstone Companies i.e., Kingstone Companies and Donegal Group go up and down completely randomly.
Pair Corralation between Kingstone Companies and Donegal Group
Given the investment horizon of 90 days Kingstone Companies is expected to generate 2.16 times more return on investment than Donegal Group. However, Kingstone Companies is 2.16 times more volatile than Donegal Group A. It trades about 0.22 of its potential returns per unit of risk. Donegal Group A is currently generating about 0.08 per unit of risk. If you would invest 919.00 in Kingstone Companies on September 12, 2024 and sell it today you would earn a total of 619.00 from holding Kingstone Companies or generate 67.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Kingstone Companies vs. Donegal Group A
Performance |
Timeline |
Kingstone Companies |
Donegal Group A |
Kingstone Companies and Donegal Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kingstone Companies and Donegal Group
The main advantage of trading using opposite Kingstone Companies and Donegal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingstone Companies 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.Kingstone Companies vs. HCI Group | Kingstone Companies vs. Universal Insurance Holdings | Kingstone Companies vs. Horace Mann Educators | Kingstone Companies vs. Heritage Insurance Hldgs |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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