Correlation Between White Mountains and Markel
Can any of the company-specific risk be diversified away by investing in both White Mountains 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 White Mountains and Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between White Mountains Insurance and Markel, you can compare the effects of market volatilities on White Mountains 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 White Mountains with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and Markel.
Diversification Opportunities for White Mountains and Markel
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between White and Markel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and White Mountains 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 White Mountains Insurance 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 White Mountains i.e., White Mountains and Markel go up and down completely randomly.
Pair Corralation between White Mountains and Markel
Considering the 90-day investment horizon White Mountains Insurance is expected to under-perform the Markel. But the stock apears to be less risky and, when comparing its historical volatility, White Mountains Insurance is 1.19 times less risky than Markel. The stock trades about -0.15 of its potential returns per unit of risk. The Markel is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 181,938 in Markel on January 12, 2025 and sell it today you would lose (4,796) from holding Markel or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. Markel
Performance |
| Timeline |
| White Mountains Insurance |
| Markel |
White Mountains and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and Markel
The main advantage of trading using opposite White Mountains and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains 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.| White Mountains vs. NI Holdings | White Mountains vs. Donegal Group A | White Mountains vs. Donegal Group B | White Mountains vs. The Hanover Insurance |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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