Correlation Between Tokio Marine and W R

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

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

Diversification Opportunities for Tokio Marine and W R

0.64

Correlation Coefficient

Tokio Marine  W R

Poor diversification

The 3 months correlation between Tokio and WR1 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tokio Marine Holdings 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 Tokio Marine 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 Tokio Marine Holdings 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 Tokio Marine i.e., Tokio Marine and W R go up and down completely randomly.

Pair Corralation between Tokio Marine and W R

Assuming the 90 days horizon Tokio Marine Holdings is expected to generate 1.59 times more return on investment than W R. However, Tokio Marine is 1.59 times more volatile than W R Berkley. It trades about -0.02 of its potential returns per unit of risk. W R Berkley is currently generating about -0.13 per unit of risk. If you would invest  3,501  in Tokio Marine Holdings on April 24, 2025 and sell it today you would lose (134.00) from holding Tokio Marine Holdings or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Tokio Marine Holdings  vs.  W R Berkley

Tokio Marine Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tokio Marine Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokio Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

W R Berkley

Risk-Adjusted Performance

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Tokio Marine and W R

The main advantage of trading using opposite Tokio Marine and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokio Marine 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 Tokio Marine Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.