Correlation Between Kemper and Markel

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

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

Diversification Opportunities for Kemper and Markel

0.89

Correlation Coefficient

Kemper  Markel

Very poor diversification

The 3 months correlation between Kemper and Markel is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and Kemper 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 Kemper 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 Kemper i.e., Kemper and Markel go up and down completely randomly.

Pair Corralation between Kemper and Markel

Given the investment horizon of 90 days Kemper is expected to under-perform the Markel. In addition to that, Kemper is 1.57 times more volatile than Markel. It trades about -0.33 of its total potential returns per unit of risk. Markel is currently generating about 0.03 per unit of volatility. If you would invest  171,845  in Markel on September 22, 2024 and sell it today you would earn a total of  875.00  from holding Markel or generate 0.51% return on investment over 90 days.

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

Kemper  vs.  Markel

Kemper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Kemper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Markel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 9 (%) 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 January 2025.

Pair Trading with Kemper and Markel

The main advantage of trading using opposite Kemper and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper 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 Kemper 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.