Correlation Between Mercury General and W R

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

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

Diversification Opportunities for Mercury General and W R

0.39

Correlation Coefficient

Mercury General  W R

Weak diversification

The 3 months correlation between Mercury and WRB is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mercury General 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 Mercury General 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 Mercury General 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 Mercury General i.e., Mercury General and W R go up and down completely randomly.

Pair Corralation between Mercury General and W R

Considering the 90-day investment horizon Mercury General is expected to under-perform the W R. In addition to that, Mercury General is 3.2 times more volatile than W R Berkley. It trades about -0.14 of its total potential returns per unit of risk. W R Berkley is currently generating about -0.04 per unit of volatility. If you would invest  6,393  in W R Berkley on November 28, 2024 and sell it today you would lose (214.00) from holding W R Berkley or give up 3.35% of portfolio value over 90 days.

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

Mercury General  vs.  W R Berkley

Mercury General

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mercury General has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

W R Berkley

Risk-Adjusted Performance

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, W R is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mercury General and W R

The main advantage of trading using opposite Mercury General and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury General 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 Mercury General 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.