Correlation Between Brown Brown and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Brown Brown 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 Brown Brown and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Brown and Willis Towers Watson, you can compare the effects of market volatilities on Brown Brown 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 Brown Brown with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Brown and Willis Towers.
Diversification Opportunities for Brown Brown and Willis Towers
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brown and Willis is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brown Brown 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 Brown Brown 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 Brown Brown 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 Brown Brown i.e., Brown Brown and Willis Towers go up and down completely randomly.
Pair Corralation between Brown Brown and Willis Towers
Assuming the 90 days horizon Brown Brown is expected to generate 0.9 times more return on investment than Willis Towers. However, Brown Brown is 1.12 times less risky than Willis Towers. It trades about 0.11 of its potential returns per unit of risk. Willis Towers Watson is currently generating about 0.05 per unit of risk. If you would invest 5,334 in Brown Brown on October 27, 2024 and sell it today you would earn a total of 4,706 from holding Brown Brown or generate 88.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Brown vs. Willis Towers Watson
Performance |
| Timeline |
| Brown Brown |
| Willis Towers Watson |
Brown Brown and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Brown and Willis Towers
The main advantage of trading using opposite Brown Brown and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Brown 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.| Brown Brown vs. CARSALESCOM | Brown Brown vs. Discover Financial Services | Brown Brown vs. CHIBA BANK | Brown Brown vs. Cars Inc |
| Willis Towers vs. GEAR4MUSIC LS 10 | Willis Towers vs. SLR Investment Corp | Willis Towers vs. Sunny Optical Technology | Willis Towers vs. New Residential Investment |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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