Correlation Between Argentum and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both Argentum 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 Argentum and Marsh McLennan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argentum 47 and Marsh McLennan Companies, you can compare the effects of market volatilities on Argentum 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 Argentum with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argentum and Marsh McLennan.
Diversification Opportunities for Argentum and Marsh McLennan
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Argentum and Marsh is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Argentum 47 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 Argentum 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 Argentum 47 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 Argentum i.e., Argentum and Marsh McLennan go up and down completely randomly.
Pair Corralation between Argentum and Marsh McLennan
Given the investment horizon of 90 days Argentum 47 is expected to generate 13.33 times more return on investment than Marsh McLennan. However, Argentum is 13.33 times more volatile than Marsh McLennan Companies. It trades about 0.02 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.07 per unit of risk. If you would invest 11.00 in Argentum 47 on September 3, 2024 and sell it today you would lose (10.47) from holding Argentum 47 or give up 95.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argentum 47 vs. Marsh McLennan Companies
Performance |
| Timeline |
| Argentum 47 |
| Marsh McLennan Companies |
Argentum and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argentum and Marsh McLennan
The main advantage of trading using opposite Argentum and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argentum 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.| Argentum vs. Marsh McLennan Companies | Argentum vs. Arthur J Gallagher | Argentum vs. Willis Towers Watson | Argentum vs. Brown Brown |
| Marsh McLennan vs. Arthur J Gallagher | Marsh McLennan vs. Willis Towers Watson | Marsh McLennan vs. Brown Brown | Marsh McLennan vs. Erie Indemnity |
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.
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