Correlation Between Capital Metals and Markel Corp

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

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

Diversification Opportunities for Capital Metals and Markel Corp

-0.54

Correlation Coefficient

Capital Metals  Markel Corp

Excellent diversification

The 3 months correlation between Capital and Markel is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and Capital Metals 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 Capital Metals PLC are associated (or correlated) with Markel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel Corp has no effect on the direction of Capital Metals i.e., Capital Metals and Markel Corp go up and down completely randomly.

Pair Corralation between Capital Metals and Markel Corp

Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Markel Corp. In addition to that, Capital Metals is 2.02 times more volatile than Markel Corp. It trades about -0.33 of its total potential returns per unit of risk. Markel Corp is currently generating about -0.08 per unit of volatility. If you would invest  172,810  in Markel Corp on October 11, 2024 and sell it today you would lose (2,307) from holding Markel Corp or give up 1.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Capital Metals PLC  vs.  Markel Corp

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Markel Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markel Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Markel Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Capital Metals and Markel Corp

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

The idea behind Capital Metals PLC and Markel Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.