Correlation Between Markel and AXIS Capital
Can any of the company-specific risk be diversified away by investing in both Markel and AXIS Capital 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 Markel and AXIS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Markel and AXIS Capital Holdings, you can compare the effects of market volatilities on Markel and AXIS Capital 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 Markel with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Markel and AXIS Capital.
Diversification Opportunities for Markel and AXIS Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Markel and AXIS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Markel and AXIS Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIS Capital Holdings and Markel 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 Markel are associated (or correlated) with AXIS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIS Capital Holdings has no effect on the direction of Markel i.e., Markel and AXIS Capital go up and down completely randomly.
Pair Corralation between Markel and AXIS Capital
Considering the 90-day investment horizon Markel is expected to generate 0.84 times more return on investment than AXIS Capital. However, Markel is 1.19 times less risky than AXIS Capital. It trades about -0.07 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about -0.06 per unit of risk. If you would invest 148,996 in Markel on January 26, 2024 and sell it today you would lose (2,760) from holding Markel or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Markel vs. AXIS Capital Holdings
Performance |
| Timeline |
| Markel |
| AXIS Capital Holdings |
Markel and AXIS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Markel and AXIS Capital
The main advantage of trading using opposite Markel and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Markel position performs unexpectedly, AXIS Capital 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 AXIS Capital will offset losses from the drop in AXIS Capital's long position.The idea behind Markel and AXIS Capital Holdings 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.| AXIS Capital vs. Assured Guaranty | AXIS Capital vs. Enact Holdings | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Radian Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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