Correlation Between ProAssurance and W R

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

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

Diversification Opportunities for ProAssurance and W R

-0.45

Correlation Coefficient

ProAssurance  W R

Very good diversification

The 3 months correlation between ProAssurance and WRB-PE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ProAssurance 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 ProAssurance 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 ProAssurance 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 ProAssurance i.e., ProAssurance and W R go up and down completely randomly.

Pair Corralation between ProAssurance and W R

Considering the 90-day investment horizon ProAssurance is expected to under-perform the W R. In addition to that, ProAssurance is 2.63 times more volatile than W R Berkley. It trades about -0.04 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

ProAssurance  vs.  W R Berkley

ProAssurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProAssurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ProAssurance sustained solid returns over the last few months and may actually be approaching a breakup point.

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 ProAssurance and W R

The main advantage of trading using opposite ProAssurance and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProAssurance 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 ProAssurance 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.