Correlation Between Markel Corp and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Markel Corp and Volkswagen 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 Corp and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Markel Corp and Volkswagen AG, you can compare the effects of market volatilities on Markel Corp and Volkswagen 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 Corp with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Markel Corp and Volkswagen.
Diversification Opportunities for Markel Corp and Volkswagen
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Markel and Volkswagen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Markel Corp and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Markel Corp 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 Corp are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Markel Corp i.e., Markel Corp and Volkswagen go up and down completely randomly.
Pair Corralation between Markel Corp and Volkswagen
Assuming the 90 days trading horizon Markel Corp is expected to generate 0.7 times more return on investment than Volkswagen. However, Markel Corp is 1.43 times less risky than Volkswagen. It trades about 0.47 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.26 per unit of risk. If you would invest 155,872 in Markel Corp on August 30, 2024 and sell it today you would earn a total of 24,667 from holding Markel Corp or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Markel Corp vs. Volkswagen AG
Performance |
| Timeline |
| Markel Corp |
| Volkswagen AG |
Markel Corp and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Markel Corp and Volkswagen
The main advantage of trading using opposite Markel Corp and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Markel Corp position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Markel Corp vs. Naked Wines plc | Markel Corp vs. Atalaya Mining | Markel Corp vs. Ross Stores | Markel Corp vs. Thor Mining PLC |
| Volkswagen vs. Batm Advanced Communications | Volkswagen vs. Scandic Hotels Group | Volkswagen vs. Host Hotels Resorts | Volkswagen vs. JB Hunt Transport |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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