Correlation Between WR Berkley and Mercury General
Can any of the company-specific risk be diversified away by investing in both WR Berkley and Mercury General 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 WR Berkley and Mercury General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WR Berkley and Mercury General, you can compare the effects of market volatilities on WR Berkley and Mercury General 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 WR Berkley with a short position of Mercury General. Check out your portfolio center. Please also check ongoing floating volatility patterns of WR Berkley and Mercury General.
Diversification Opportunities for WR Berkley and Mercury General
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WRB-PG and Mercury is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding WR Berkley and Mercury General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury General and WR Berkley 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 WR Berkley are associated (or correlated) with Mercury General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury General has no effect on the direction of WR Berkley i.e., WR Berkley and Mercury General go up and down completely randomly.
Pair Corralation between WR Berkley and Mercury General
Assuming the 90 days trading horizon WR Berkley is expected to under-perform the Mercury General. But the preferred stock apears to be less risky and, when comparing its historical volatility, WR Berkley is 2.56 times less risky than Mercury General. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Mercury General is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,186 in Mercury General on August 31, 2024 and sell it today you would earn a total of 699.00 from holding Mercury General or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WR Berkley vs. Mercury General
Performance |
| Timeline |
| WR Berkley |
| Mercury General |
WR Berkley and Mercury General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WR Berkley and Mercury General
The main advantage of trading using opposite WR Berkley and Mercury General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WR Berkley position performs unexpectedly, Mercury General 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 Mercury General will offset losses from the drop in Mercury General's long position.| WR Berkley vs. Aspen Insurance Holdings | WR Berkley vs. Selective Insurance Group | WR Berkley vs. Aspen Insurance Holdings | WR Berkley vs. AmTrust Financial Services |
| Mercury General vs. Selective Insurance Group | Mercury General vs. Kemper | Mercury General vs. Donegal Group B | Mercury General vs. Argo Group International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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