Insurance risk and market risk are largely uncorrelated

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KIE (ticker) is a SPDR S&P Insurance ETF. It was started to trade on Nov. 15, 2004. Download the daily returns of KIE from 1/1/2010 to 7/7/2017. Compute the beta and standard deviation of the insurance ETF and compare with the numbers for Berkshire Hathaway in the same horizon. Compare and plot the returns of KIE and Berkshire. Then answer the following question: why are the betas of BKG and KIE fairly high despite that insurance risk and market risk are largely uncorrelated?

Reference no: EM131601024

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