Correlation Between London Security and Markel Corp
Can any of the company-specific risk be diversified away by investing in both London Security and Markel Corp 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 London Security and Markel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Markel Corp, you can compare the effects of market volatilities on London Security and Markel Corp 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 London Security with a short position of Markel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Markel Corp.
Diversification Opportunities for London Security and Markel Corp
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Markel is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Markel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel Corp and London Security 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 London Security Plc are associated (or correlated) with Markel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel Corp has no effect on the direction of London Security i.e., London Security and Markel Corp go up and down completely randomly.
Pair Corralation between London Security and Markel Corp
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the Markel Corp. In addition to that, London Security is 1.18 times more volatile than Markel Corp. It trades about -0.09 of its total potential returns per unit of risk. Markel Corp is currently generating about 0.12 per unit of volatility. If you would invest 157,463 in Markel Corp on September 24, 2024 and sell it today you would earn a total of 14,555 from holding Markel Corp or generate 9.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
London Security Plc vs. Markel Corp
Performance |
Timeline |
London Security Plc |
Markel Corp |
London Security and Markel Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with London Security and Markel Corp
The main advantage of trading using opposite London Security and Markel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Markel Corp 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 Corp will offset losses from the drop in Markel Corp's long position.London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
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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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