Correlation Between Global Indemnity and W R

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

By analyzing existing cross correlation between Global Indemnity PLC and W R Berkley, you can compare the effects of market volatilities on Global Indemnity and W R 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 Global Indemnity with a short position of W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and W R.

Diversification Opportunities for Global Indemnity and W R

-0.41

Correlation Coefficient

Global Indemnity  W R

Very good diversification

The 3 months correlation between Global and WRB-PE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley and Global Indemnity 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 Global Indemnity PLC are associated (or correlated) with W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Global Indemnity i.e., Global Indemnity and W R go up and down completely randomly.

Pair Corralation between Global Indemnity and W R

Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 2.36 times more return on investment than W R. However, Global Indemnity is 2.36 times more volatile than W R Berkley. It trades about 0.15 of its potential returns per unit of risk. W R Berkley is currently generating about -0.02 per unit of risk. If you would invest  3,494  in Global Indemnity PLC on September 19, 2024 and sell it today you would earn a total of  131.00  from holding Global Indemnity PLC or generate 3.75% return on investment over 90 days.

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

Global Indemnity PLC  vs.  W R Berkley

Global Indemnity PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Indemnity PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Global Indemnity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

W R Berkley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, W R is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Indemnity and W R

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

The idea behind Global Indemnity PLC and W R Berkley 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.