Correlation Between Root and Markel
Can any of the company-specific risk be diversified away by investing in both Root 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 Root and Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Root Inc and Markel, you can compare the effects of market volatilities on Root 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 Root with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Root and Markel.
Diversification Opportunities for Root and Markel
Very poor diversification
The 3 months correlation between Root and Markel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Root Inc and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and Root 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 Root Inc 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 Root i.e., Root and Markel go up and down completely randomly.
Pair Corralation between Root and Markel
Given the investment horizon of 90 days Root Inc is expected to generate 9.58 times more return on investment than Markel. However, Root is 9.58 times more volatile than Markel. It trades about 0.37 of its potential returns per unit of risk. Markel is currently generating about 0.37 per unit of risk. If you would invest 4,047 in Root Inc on August 27, 2024 and sell it today you would earn a total of 6,797 from holding Root Inc or generate 167.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Root Inc vs. Markel
Performance |
| Timeline |
| Root Inc |
| Markel |
Root and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Root and Markel
The main advantage of trading using opposite Root and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Root 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.| Root vs. Selective Insurance Group | Root vs. Donegal Group B | Root vs. Horace Mann Educators | Root vs. Global Indemnity PLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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