Correlation Between Nationwide Building and Markel Corp
Can any of the company-specific risk be diversified away by investing in both Nationwide Building 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 Nationwide Building and Markel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Building Society and Markel Corp, you can compare the effects of market volatilities on Nationwide Building 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 Nationwide Building with a short position of Markel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Markel Corp.
Diversification Opportunities for Nationwide Building and Markel Corp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nationwide and Markel is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and Nationwide Building 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 Nationwide Building Society 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 Nationwide Building i.e., Nationwide Building and Markel Corp go up and down completely randomly.
Pair Corralation between Nationwide Building and Markel Corp
Assuming the 90 days trading horizon Nationwide Building is expected to generate 1.85 times less return on investment than Markel Corp. But when comparing it to its historical volatility, Nationwide Building Society is 8.91 times less risky than Markel Corp. It trades about 0.33 of its potential returns per unit of risk. Markel Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 183,164 in Markel Corp on November 28, 2024 and sell it today you would earn a total of 5,798 from holding Markel Corp or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nationwide Building Society vs. Markel Corp
Performance |
| Timeline |
| Nationwide Building |
| Markel Corp |
Nationwide Building and Markel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and Markel Corp
The main advantage of trading using opposite Nationwide Building and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building 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.| Nationwide Building vs. British American Tobacco | Nationwide Building vs. GlobalData PLC | Nationwide Building vs. Rosslyn Data Technologies | Nationwide Building vs. BW Offshore |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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