Correlation Between Global Indemnity and Markel

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

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

Diversification Opportunities for Global Indemnity and Markel

0.32

Correlation Coefficient

Global Indemnity  Markel

Weak diversification

The 3 months correlation between Global and Markel is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel and Global Indemnity 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 Global Indemnity PLC 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 Global Indemnity i.e., Global Indemnity and Markel go up and down completely randomly.

Pair Corralation between Global Indemnity and Markel

Given the investment horizon of 90 days Global Indemnity PLC is expected to generate 100.26 times more return on investment than Markel. However, Global Indemnity is 100.26 times more volatile than Markel. It trades about 0.11 of its potential returns per unit of risk. Markel is currently generating about 0.15 per unit of risk. If you would invest  3,179  in Global Indemnity PLC on September 4, 2024 and sell it today you would earn a total of  463.00  from holding Global Indemnity PLC or generate 14.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Global Indemnity PLC  vs.  Markel

Global Indemnity PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Indemnity PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Global Indemnity demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Markel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Markel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Indemnity and Markel

The main advantage of trading using opposite Global Indemnity and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity 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 Global Indemnity PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.