Correlation Between Golden Metal and Markel Corp

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

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

Diversification Opportunities for Golden Metal and Markel Corp

0.68

Correlation Coefficient

Golden Metal  Markel Corp

Poor diversification

The 3 months correlation between Golden and Markel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and Golden Metal 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 Golden Metal Resources 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 Golden Metal i.e., Golden Metal and Markel Corp go up and down completely randomly.

Pair Corralation between Golden Metal and Markel Corp

Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 33.31 times more return on investment than Markel Corp. However, Golden Metal is 33.31 times more volatile than Markel Corp. It trades about 0.06 of its potential returns per unit of risk. Markel Corp is currently generating about 0.04 per unit of risk. If you would invest  9.00  in Golden Metal Resources on October 23, 2024 and sell it today you would earn a total of  3,131  from holding Golden Metal Resources or generate 34788.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.6%
Values	Daily Returns

Golden Metal Resources  vs.  Markel Corp

Golden Metal Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Golden Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Markel Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Markel Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Markel Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Metal and Markel Corp

The main advantage of trading using opposite Golden Metal and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal 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 Golden Metal Resources 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.