Correlation Between W R and Markel

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

Diversification Opportunities for W R and Markel

0.7

Correlation Coefficient

W R  Markel

Poor diversification

The 3 months correlation between WRB and Markel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of W R i.e., W R and Markel go up and down completely randomly.

Pair Corralation between W R and Markel

Considering the 90-day investment horizon W R Berkley is expected to generate 0.69 times more return on investment than Markel. However, W R Berkley is 1.45 times less risky than Markel. It trades about 0.12 of its potential returns per unit of risk. Markel is currently generating about 0.07 per unit of risk. If you would invest  5,890  in W R Berkley on December 27, 2024 and sell it today you would earn a total of  552.00  from holding W R Berkley or generate 9.37% return on investment over 90 days.

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

W R Berkley  vs.  Markel

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 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, W R may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Markel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 5 (%) 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 April 2025.

Pair Trading with W R and Markel

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

The idea behind W R Berkley and Markel 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.