Correlation Between Mercury General and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Mercury General 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 Mercury General and WR Berkley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury General and WR Berkley, you can compare the effects of market volatilities on Mercury General 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 Mercury General with a short position of WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury General and WR Berkley.
Diversification Opportunities for Mercury General and WR Berkley
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercury and WRB-PH is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mercury General and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley and Mercury General 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 Mercury General 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 Mercury General i.e., Mercury General and WR Berkley go up and down completely randomly.
Pair Corralation between Mercury General and WR Berkley
Considering the 90-day investment horizon Mercury General is expected to generate 2.02 times more return on investment than WR Berkley. However, Mercury General is 2.02 times more volatile than WR Berkley. It trades about 0.16 of its potential returns per unit of risk. WR Berkley is currently generating about 0.03 per unit of risk. If you would invest 3,809 in Mercury General on September 2, 2024 and sell it today you would earn a total of 4,087 from holding Mercury General or generate 107.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury General vs. WR Berkley
Performance |
| Timeline |
| Mercury General |
| WR Berkley |
Mercury General and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury General and WR Berkley
The main advantage of trading using opposite Mercury General and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury General 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.| Mercury General vs. Selective Insurance Group | Mercury General vs. Kemper | Mercury General vs. Donegal Group B | Mercury General vs. Argo Group International |
| WR Berkley vs. Aspen Insurance Holdings | WR Berkley vs. Selective Insurance Group | WR Berkley vs. Aspen Insurance Holdings | WR Berkley vs. AmTrust Financial Services |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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