Correlation Between CNA Financial and W R

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

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

Diversification Opportunities for CNA Financial and W R

0.58

Correlation Coefficient

CNA Financial  W R

Very weak diversification

The 3 months correlation between CNA and WRB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CNA Financial 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 CNA Financial 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 CNA Financial 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 CNA Financial i.e., CNA Financial and W R go up and down completely randomly.

Pair Corralation between CNA Financial and W R

Considering the 90-day investment horizon CNA Financial is expected to generate 1.09 times less return on investment than W R. But when comparing it to its historical volatility, CNA Financial is 1.06 times less risky than W R. It trades about 0.04 of its potential returns per unit of risk. W R Berkley is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,722  in W R Berkley on September 14, 2024 and sell it today you would earn a total of  1,326  from holding W R Berkley or generate 28.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

CNA Financial  vs.  W R Berkley

CNA Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CNA Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

W R Berkley

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, W R is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CNA Financial and W R

The main advantage of trading using opposite CNA Financial and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNA Financial 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.

The idea behind CNA Financial and W R Berkley 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.