Correlation Between Global Indemnity and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Global Indemnity and WR Berkley 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 Global Indemnity and WR Berkley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Indemnity PLC and WR Berkley, you can compare the effects of market volatilities on Global Indemnity and WR Berkley 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 Global Indemnity with a short position of WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Indemnity and WR Berkley.
Diversification Opportunities for Global Indemnity and WR Berkley
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and WRB-PH is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley and Global Indemnity 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 Global Indemnity PLC are associated (or correlated) with WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Global Indemnity i.e., Global Indemnity and WR Berkley go up and down completely randomly.
Pair Corralation between Global Indemnity and WR Berkley
Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 1.87 times more return on investment than WR Berkley. However, Global Indemnity is 1.87 times more volatile than WR Berkley. It trades about 0.03 of its potential returns per unit of risk. WR Berkley is currently generating about 0.02 per unit of risk. If you would invest 2,712 in Global Indemnity PLC on November 9, 2024 and sell it today you would earn a total of 788.00 from holding Global Indemnity PLC or generate 29.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.17% |
| Values | Daily Returns |
Global Indemnity PLC vs. WR Berkley
Performance |
| Timeline |
| Global Indemnity PLC |
| WR Berkley |
Global Indemnity and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Indemnity and WR Berkley
The main advantage of trading using opposite Global Indemnity and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity position performs unexpectedly, WR Berkley 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 WR Berkley will offset losses from the drop in WR Berkley's long position.| Global Indemnity vs. Selective Insurance Group | Global Indemnity vs. Kemper | Global Indemnity vs. Donegal Group B | Global Indemnity vs. Argo Group International |
| WR Berkley vs. WR Berkley | WR Berkley vs. WR Berkley | WR Berkley vs. Southern Company Series | WR Berkley vs. DTE Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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