Correlation Between White Mountains and W R
Can any of the company-specific risk be diversified away by investing in both White Mountains and W R 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 W R 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 W R Berkley, you can compare the effects of market volatilities on White Mountains and W R 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 W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and W R.
Diversification Opportunities for White Mountains and W R
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between White and WRB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of White Mountains i.e., White Mountains and W R go up and down completely randomly.
Pair Corralation between White Mountains and W R
Considering the 90-day investment horizon White Mountains Insurance is expected to generate 1.16 times more return on investment than W R. However, White Mountains is 1.16 times more volatile than W R Berkley. It trades about 0.28 of its potential returns per unit of risk. W R Berkley is currently generating about 0.27 per unit of risk. If you would invest 181,487 in White Mountains Insurance on August 27, 2024 and sell it today you would earn a total of 17,347 from holding White Mountains Insurance or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. W R Berkley
Performance |
| Timeline |
| White Mountains Insurance |
| W R Berkley |
White Mountains and W R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and W R
The main advantage of trading using opposite White Mountains and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains position performs unexpectedly, W R 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 W R will offset losses from the drop in W R'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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