Correlation Between Bowhead Specialty and Markel

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

By analyzing existing cross correlation between Bowhead Specialty Holdings and Markel, you can compare the effects of market volatilities on Bowhead Specialty and Markel 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 Bowhead Specialty with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Markel.

Diversification Opportunities for Bowhead Specialty and Markel

-0.35

Correlation Coefficient

Bowhead Specialty  Markel

Very good diversification

The 3 months correlation between Bowhead and Markel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and Bowhead Specialty 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 Bowhead Specialty Holdings are associated (or correlated) with Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Markel go up and down completely randomly.

Pair Corralation between Bowhead Specialty and Markel

Considering the 90-day investment horizon Bowhead Specialty is expected to generate 1.47 times less return on investment than Markel. But when comparing it to its historical volatility, Bowhead Specialty Holdings is 1.48 times less risky than Markel. It trades about 0.07 of its potential returns per unit of risk. Markel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  183,221  in Markel on November 28, 2024 and sell it today you would earn a total of  6,372  from holding Markel or generate 3.48% return on investment over 90 days.

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

Bowhead Specialty Holdings  vs.  Markel

Bowhead Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowhead Specialty Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Markel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Markel may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bowhead Specialty and Markel

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

The idea behind Bowhead Specialty Holdings and Markel 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.