Correlation Between Bankers Investment and Markel Corp

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Can any of the company-specific risk be diversified away by investing in both Bankers Investment and Markel Corp 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 Bankers Investment and Markel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankers Investment Trust and Markel Corp, you can compare the effects of market volatilities on Bankers Investment and Markel Corp 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 Bankers Investment with a short position of Markel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Markel Corp.

Diversification Opportunities for Bankers Investment and Markel Corp

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Bankers and Markel is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with Markel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel Corp has no effect on the direction of Bankers Investment i.e., Bankers Investment and Markel Corp go up and down completely randomly.

Pair Corralation between Bankers Investment and Markel Corp

Assuming the 90 days trading horizon Bankers Investment is expected to generate 2.12 times less return on investment than Markel Corp. But when comparing it to its historical volatility, Bankers Investment Trust is 1.49 times less risky than Markel Corp. It trades about 0.06 of its potential returns per unit of risk. Markel Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  147,937  in Markel Corp on September 1, 2024 and sell it today you would earn a total of  30,709  from holding Markel Corp or generate 20.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.44%
ValuesDaily Returns

Bankers Investment Trust  vs.  Markel Corp

 Performance 
       Timeline  
Bankers Investment Trust 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Markel Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Markel Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Markel Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Bankers Investment and Markel Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bankers Investment and Markel Corp

The main advantage of trading using opposite Bankers Investment and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment position performs unexpectedly, Markel Corp 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 Corp will offset losses from the drop in Markel Corp's long position.
The idea behind Bankers Investment Trust and Markel Corp 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.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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