Correlation Between ProAssurance and Markel
Can any of the company-specific risk be diversified away by investing in both ProAssurance 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 ProAssurance and Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProAssurance and Markel, you can compare the effects of market volatilities on ProAssurance 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 ProAssurance with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProAssurance and Markel.
Diversification Opportunities for ProAssurance and Markel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProAssurance and Markel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ProAssurance and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and ProAssurance 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 ProAssurance 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 ProAssurance i.e., ProAssurance and Markel go up and down completely randomly.
Pair Corralation between ProAssurance and Markel
Considering the 90-day investment horizon ProAssurance is expected to generate 1.31 times less return on investment than Markel. In addition to that, ProAssurance is 1.66 times more volatile than Markel. It trades about 0.17 of its total potential returns per unit of risk. Markel is currently generating about 0.37 per unit of volatility. 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 |
ProAssurance vs. Markel
Performance |
| Timeline |
| ProAssurance |
| Markel |
ProAssurance and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProAssurance and Markel
The main advantage of trading using opposite ProAssurance and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProAssurance 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.| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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