Correlation Between Fanhua and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Fanhua and Willis Towers 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 Fanhua and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and Willis Towers Watson, you can compare the effects of market volatilities on Fanhua and Willis Towers 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 Fanhua with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and Willis Towers.
Diversification Opportunities for Fanhua and Willis Towers
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fanhua and Willis is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson and Fanhua 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 Fanhua Inc are associated (or correlated) with Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Fanhua i.e., Fanhua and Willis Towers go up and down completely randomly.
Pair Corralation between Fanhua and Willis Towers
Assuming the 90 days trading horizon Fanhua Inc is expected to under-perform the Willis Towers. In addition to that, Fanhua is 6.7 times more volatile than Willis Towers Watson. It trades about -0.37 of its total potential returns per unit of risk. Willis Towers Watson is currently generating about 0.27 per unit of volatility. If you would invest 29,115 in Willis Towers Watson on October 12, 2024 and sell it today you would earn a total of 1,285 from holding Willis Towers Watson or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fanhua Inc vs. Willis Towers Watson
Performance |
| Timeline |
| Fanhua Inc |
| Willis Towers Watson |
Fanhua and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and Willis Towers
The main advantage of trading using opposite Fanhua and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua position performs unexpectedly, Willis Towers 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 Willis Towers will offset losses from the drop in Willis Towers' long position.| Fanhua vs. Q2M Managementberatung AG | Fanhua vs. CeoTronics AG | Fanhua vs. Ares Management Corp | Fanhua vs. VITEC SOFTWARE GROUP |
| Willis Towers vs. ZINC MEDIA GR | Willis Towers vs. Datadog | Willis Towers vs. SILVER BULLET DATA | Willis Towers vs. CNVISION MEDIA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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