Correlation Between Prosafe SE and Markel

Can any of the company-specific risk be diversified away by investing in both Prosafe SE 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 Prosafe SE and Markel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prosafe SE and Markel, you can compare the effects of market volatilities on Prosafe SE 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 Prosafe SE with a short position of Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Markel.

Diversification Opportunities for Prosafe SE and Markel

-0.87

Correlation Coefficient

Prosafe SE  Markel

Pay attention - limited upside

The 3 months correlation between Prosafe and Markel is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and Prosafe SE 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 Prosafe SE 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 Prosafe SE i.e., Prosafe SE and Markel go up and down completely randomly.

Pair Corralation between Prosafe SE and Markel

Assuming the 90 days horizon Prosafe SE is expected to under-perform the Markel. In addition to that, Prosafe SE is 3.62 times more volatile than Markel. It trades about -0.41 of its total potential returns per unit of risk. Markel is currently generating about 0.18 per unit of volatility. If you would invest  143,400  in Markel on September 2, 2024 and sell it today you would earn a total of  26,900  from holding Markel or generate 18.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Prosafe SE  vs.  Markel

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Markel

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Markel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prosafe SE and Markel

The main advantage of trading using opposite Prosafe SE and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE 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.

The idea behind Prosafe SE and Markel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.