Correlation Between Skyward Specialty and W R

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

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

Diversification Opportunities for Skyward Specialty and W R

-0.35

Correlation Coefficient

Skyward Specialty  W R

Very good diversification

The 3 months correlation between Skyward and WRB-PE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Skyward Specialty 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 Skyward Specialty 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 Skyward Specialty 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 Skyward Specialty i.e., Skyward Specialty and W R go up and down completely randomly.

Pair Corralation between Skyward Specialty and W R

Given the investment horizon of 90 days Skyward Specialty Insurance is expected to generate 3.64 times more return on investment than W R. However, Skyward Specialty is 3.64 times more volatile than W R Berkley. It trades about 0.22 of its potential returns per unit of risk. W R Berkley is currently generating about 0.05 per unit of risk. If you would invest  4,149  in Skyward Specialty Insurance on September 5, 2024 and sell it today you would earn a total of  1,267  from holding Skyward Specialty Insurance or generate 30.54% return on investment over 90 days.

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

Skyward Specialty Insurance  vs.  W R Berkley

Skyward Specialty

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Skyward Specialty Insurance are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Skyward Specialty exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of rather sound fundamental drivers, W R is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Skyward Specialty and W R

The main advantage of trading using opposite Skyward Specialty and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyward Specialty 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 Skyward Specialty Insurance 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.