Correlation Between GOODTECH ASA and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and Marsh McLennan 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 GOODTECH ASA and Marsh McLennan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODTECH ASA A and Marsh McLennan Companies, you can compare the effects of market volatilities on GOODTECH ASA and Marsh McLennan 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 GOODTECH ASA with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and Marsh McLennan.
Diversification Opportunities for GOODTECH ASA and Marsh McLennan
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOODTECH and Marsh is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and Marsh McLennan go up and down completely randomly.
Pair Corralation between GOODTECH ASA and Marsh McLennan
Assuming the 90 days horizon GOODTECH ASA A is expected to under-perform the Marsh McLennan. In addition to that, GOODTECH ASA is 2.0 times more volatile than Marsh McLennan Companies. It trades about -0.08 of its total potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.05 per unit of volatility. If you would invest 18,380 in Marsh McLennan Companies on October 12, 2024 and sell it today you would earn a total of 1,810 from holding Marsh McLennan Companies or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODTECH ASA A vs. Marsh McLennan Companies
Performance |
| Timeline |
| GOODTECH ASA A |
| Marsh McLennan Companies |
GOODTECH ASA and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODTECH ASA and Marsh McLennan
The main advantage of trading using opposite GOODTECH ASA and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan's long position.| GOODTECH ASA vs. Vinci S A | GOODTECH ASA vs. Johnson Controls International | GOODTECH ASA vs. Larsen Toubro Limited | GOODTECH ASA vs. China Railway Group |
| Marsh McLennan vs. NH HOTEL GROUP | Marsh McLennan vs. The Hongkong and | Marsh McLennan vs. Thai Beverage Public | Marsh McLennan vs. TYSON FOODS A |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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