Correlation Between NI Holdings and Markel
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Markel 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 NI Holdings and Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Markel, you can compare the effects of market volatilities on NI Holdings and Markel 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 NI Holdings with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Markel.
Diversification Opportunities for NI Holdings and Markel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NODK and Markel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and NI Holdings 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 NI Holdings are associated (or correlated) with Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of NI Holdings i.e., NI Holdings and Markel go up and down completely randomly.
Pair Corralation between NI Holdings and Markel
Given the investment horizon of 90 days NI Holdings is expected to generate 5.63 times less return on investment than Markel. But when comparing it to its historical volatility, NI Holdings is 1.24 times less risky than Markel. It trades about 0.08 of its potential returns per unit of risk. Markel is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 156,400 in Markel on August 27, 2024 and sell it today you would earn a total of 19,762 from holding Markel or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Markel
Performance |
| Timeline |
| NI Holdings |
| Markel |
NI Holdings and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Markel
The main advantage of trading using opposite NI Holdings and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Markel 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 will offset losses from the drop in Markel's long position.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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