Correlation Between Markel and W R

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

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

Diversification Opportunities for Markel and W R

0.47

Correlation Coefficient

Markel  W R

Very weak diversification

The 3 months correlation between Markel and WRB-PE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Markel 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 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 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 Markel i.e., Markel and W R go up and down completely randomly.

Pair Corralation between Markel and W R

Considering the 90-day investment horizon Markel is expected to generate 1.03 times more return on investment than W R. However, Markel is 1.03 times more volatile than W R Berkley. It trades about -0.09 of its potential returns per unit of risk. W R Berkley is currently generating about -0.35 per unit of risk. If you would invest  150,878  in Markel on February 1, 2024 and sell it today you would lose (3,244) from holding Markel or give up 2.15% of portfolio value over 90 days.

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

Markel  vs.  W R Berkley

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.

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 latest unsteady performance, the Preferred Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Markel and W R

The main advantage of trading using opposite Markel and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Markel 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 Markel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.