Correlation Between Markel and Kemper

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

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

Diversification Opportunities for Markel and Kemper

0.9

Correlation Coefficient

Markel  Kemper

Almost no diversification

The 3 months correlation between Markel and Kemper is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Markel and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Markel 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 Markel are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Markel i.e., Markel and Kemper go up and down completely randomly.

Pair Corralation between Markel and Kemper

Considering the 90-day investment horizon Markel is expected to generate 0.63 times more return on investment than Kemper. However, Markel is 1.59 times less risky than Kemper. It trades about 0.09 of its potential returns per unit of risk. Kemper is currently generating about -0.25 per unit of risk. If you would invest  167,033  in Markel on September 20, 2024 and sell it today you would earn a total of  3,130  from holding Markel or generate 1.87% return on investment over 90 days.

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

Markel  vs.  Kemper

Markel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 7 (%) 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.

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 weak basic indicators, Kemper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Markel and Kemper

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

The idea behind Markel and Kemper 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.