Correlation Between W R and Lemonade

Can any of the company-specific risk be diversified away by investing in both W R and Lemonade 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 Lemonade 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 Lemonade, you can compare the effects of market volatilities on W R and Lemonade 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 Lemonade. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and Lemonade.

Diversification Opportunities for W R and Lemonade

0.17

Correlation Coefficient

W R  Lemonade

Average diversification

The 3 months correlation between WRB and Lemonade is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and Lemonade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemonade 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 Lemonade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemonade has no effect on the direction of W R i.e., W R and Lemonade go up and down completely randomly.

Pair Corralation between W R and Lemonade

Considering the 90-day investment horizon W R Berkley is expected to generate 0.26 times more return on investment than Lemonade. However, W R Berkley is 3.89 times less risky than Lemonade. It trades about 0.17 of its potential returns per unit of risk. Lemonade is currently generating about -0.02 per unit of risk. If you would invest  5,845  in W R Berkley on December 28, 2024 and sell it today you would earn a total of  783.00  from holding W R Berkley or generate 13.4% return on investment over 90 days.

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

W R Berkley  vs.  Lemonade

W R Berkley

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, W R sustained solid returns over the last few months and may actually be approaching a breakup point.

Lemonade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lemonade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lemonade is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with W R and Lemonade

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

The idea behind W R Berkley and Lemonade 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..