Correlation Between W R and Kinsale Capital

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

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

Diversification Opportunities for W R and Kinsale Capital

-0.14

Correlation Coefficient

W R  Kinsale Capital

Good diversification

The 3 months correlation between WRB-PE and Kinsale is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and W R 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 W R Berkley are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of W R i.e., W R and Kinsale Capital go up and down completely randomly.

Pair Corralation between W R and Kinsale Capital

Assuming the 90 days trading horizon W R Berkley is expected to generate 0.26 times more return on investment than Kinsale Capital. However, W R Berkley is 3.92 times less risky than Kinsale Capital. It trades about -0.08 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about -0.04 per unit of risk. If you would invest  2,425  in W R Berkley on September 21, 2024 and sell it today you would lose (24.00) from holding W R Berkley or give up 0.99% of portfolio value over 90 days.

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

W R Berkley  vs.  Kinsale Capital Group

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kinsale Capital Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with W R and Kinsale Capital

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

The idea behind W R Berkley and Kinsale Capital Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.