Correlation Between Markel and WR Berkley

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

Diversification Opportunities for Markel and WR Berkley

MarkelWRB-PHDiversified AwayMarkelWRB-PHDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Markel and WRB-PH is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Markel and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR 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 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 Markel i.e., Markel and WR Berkley go up and down completely randomly.

Pair Corralation between Markel and WR Berkley

Considering the 90-day investment horizon Markel is expected to generate 2.42 times more return on investment than WR Berkley. However, Markel is 2.42 times more volatile than WR Berkley. It trades about 0.04 of its potential returns per unit of risk. WR Berkley is currently generating about -0.03 per unit of risk. If you would invest  181,106  in Markel on November 25, 2024 and sell it today you would earn a total of  2,710  from holding Markel or generate 1.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Markel  vs.  WR Berkley

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15MKL WRB-PH
       Timeline  
Markel 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 3 (%) 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 latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,6501,7001,7501,8001,8501,9001,9502,0002,050
WR Berkley 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days WR Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, WR Berkley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1717.51818.519

Markel and WR Berkley Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.44-4.07-2.71-1.34-0.02281.372.784.195.617.02 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15MKL WRB-PH
       Returns  

Pair Trading with Markel and WR Berkley

The main advantage of trading using opposite Markel and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Markel 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.
The idea behind Markel and WR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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