Correlation Between Loews Corp and W R

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

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

Diversification Opportunities for Loews Corp and W R

-0.4

Correlation Coefficient

Loews Corp  W R

Very good diversification

The 3 months correlation between Loews and WRB-PE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp 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 Loews Corp 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 Loews Corp 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 Loews Corp i.e., Loews Corp and W R go up and down completely randomly.

Pair Corralation between Loews Corp and W R

Taking into account the 90-day investment horizon Loews Corp is expected to under-perform the W R. In addition to that, Loews Corp is 1.33 times more volatile than W R Berkley. It trades about -0.06 of its total potential returns per unit of risk. W R Berkley is currently generating about -0.02 per unit of volatility. If you would invest  2,447  in W R Berkley on September 19, 2024 and sell it today you would lose (7.00) from holding W R Berkley or give up 0.29% of portfolio value over 90 days.

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

Loews Corp  vs.  W R Berkley

Loews Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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 Loews Corp and W R

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

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .