Correlation Between Markel and CNA Financial

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

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

Diversification Opportunities for Markel and CNA Financial

0.0

Correlation Coefficient

Markel  CNA Financial

Pay attention - limited upside

The 3 months correlation between Markel and CNA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Markel and CNA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNA Financial and Markel 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 Markel are associated (or correlated) with CNA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNA Financial has no effect on the direction of Markel i.e., Markel and CNA Financial go up and down completely randomly.

Pair Corralation between Markel and CNA Financial

Considering the 90-day investment horizon Markel is expected to under-perform the CNA Financial. In addition to that, Markel is 1.03 times more volatile than CNA Financial. It trades about -0.01 of its total potential returns per unit of risk. CNA Financial is currently generating about 0.07 per unit of volatility. If you would invest  4,338  in CNA Financial on February 2, 2024 and sell it today you would earn a total of  115.00  from holding CNA Financial or generate 2.65% return on investment over 90 days.

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

Markel  vs.  CNA Financial

Markel

Risk-Adjusted Performance

5 of 100

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 persistent forward-looking signals, Markel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

CNA Financial

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNA Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CNA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Markel and CNA Financial

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

The idea behind Markel and CNA Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.